1 percent local option tax sees more opposition
"In an already competitive market for our local businesses, exacerbated by our proximity to tax-free New Hampshire and the ease of internet shopping, the membership of the Brattleboro Area Chamber of Commerce urges Brattleboro Town Meeting Representatives to vote 'no' on Article 11," says a letter distributed to reps Wednesday during an informational meeting. "Increasing the sales tax may seem like an easy and inconsequential way to decrease our property taxes. But for retailers, many of whom are sole proprietors who run their shops with limited staff and small profit margins, the consequences of the easy solution could be a negative impact on their ability to do business in Brattleboro."
The tax would go into effect July 1 if approved at Representative Town Meeting on March 23. Food is exempt but taxable items include belt buckles, sewing materials, briefcases, cosmetics, wallets, watches, jewelry, helmets, soaps, shampoo, toothpaste and more.
Select Board member Tim Wessel proposed having another vote on adopting the tax, which has been considered in town more than four times before, according to Assistant Town Manager Patrick Moreland's estimate.
"It's the last way to raise revenue without raising property taxes," Wessel wrote in a letter to reps, which was signed by current board members Shanta Lee Gander, David Schoales and Brandie Starr, and Daniel Quipp and Elizabeth McLoughlin, who were recently elected and will be sworn in March 25. "There is simply no evidence that a penny on certain items added for Brattleboro will negatively affect our retailers. Remember, most shoppers who come from out of state are used to paying equal to or indeed higher sales taxes back home."
Contact information for Kate O'Connor, Select Board chairwoman and chamber executive director, was listed at bottom of the chamber's letter. Almost 70 percent of the group's membership opposed the tax and about 13.6 percent was undecided.
Downtown Brattleboro Alliance Executive Director Stephanie Bonin said her group opposes the tax and store owners will be writing about how it would affect them. Several store owners interviewed by the Reformer in January indicated it would harm their business.
Wessel pointed out that since 2016, all major internet retailers must pay 6 percent state sales tax and an extra penny if the customer lives in a town with the option tax. And town officials expect to generate more than $600,000 a year.
Joining the chamber and DBA in opposition is the Brattleboro Development Credit Corp.
"The real problem with a 1 percent tax is that we are having the wrong conversation," BDCC board President Bob Stevens and board members Tammy Richards, Deborah Boyle, Steve Gorden, John Meyer, Craig Miskovich, Stephan Morse, Dan Normandeau, Mark Richards and Phil Steckler wrote in an op-ed published online Tuesday. "We should be improving every aspect of the town's tax base so revenue sources can all be more productive. The local economy is not out of our control. It's shaped by innumerable actions, choices and policies. Town revenue is the product of the fiscal health of households, institutions and businesses. To improve the economy, we must invest in the hard, long-term work of improving the base which drives yield on our tax levies."
Brattleboro already has an additional 1 percent tax on rooms, meals and alcohol. Another local tax, BDCC board members said, is "a short term and short sighted fix to a decades long problem."
"Some say as a 'border town' Brattleboro needs low taxes to compete with New Hampshire," they wrote. "But retail receipts are down all over. The culprit is online sales ... Additionally, retail sales are affected by our demographics: Older, smaller households buy less. Sales taxes are also 'regressive' — harder on low income people, especially those who lack transportation, credit or technology to spend elsewhere."
But Wessel argued that the tax is progressive: "Because it is also tied directly to an existing sales tax (6 percent), it is also directly tied to the limitations imposed on that sales tax. Specifically, the sales tax does not apply to 'essentials' such as food, clothing, motor vehicle fuel, medicine or medical supplies ... It means that the modest addition of one penny is almost exclusively paid for by people who already can afford to pay 6 pennies tax, and gladly do so every day."
The rate of a progressive tax increases as the payer's income increases and the rate of a regressive tax increases as the payer's income decreases.
BDCC board members said retail sales reflect visitor activity as well as spending by people from the community.
"Wages drive spending for households that rely upon earned income," they wrote, adding that their organization's recovery strategy for the closure of Vernon-based Vermont Yankee nuclear plant "has focused on retaining and creating well-paid jobs. However, VY wages and plant spending were exceptionally high, so we lost millions of dollars circulating through the economy that will take us years to fully replace."
About 600 plant workers earned $100,000 on average, according to the op-ed, and the average household income in the region is about $50,000.
"[S]o employment changes have far-reaching effects which require us to act comprehensively, thoughtfully and strategically to create long-term gains," BDCC board members wrote. "A plan for long-term municipal fiscal health has to focus on the commercial and industrial grand list. In Brattleboro, as across Vermont, economic growth has lagged behind the U.S. One result is that commercial and industrial properties form a much smaller share of the grand list than in the past, therefore the relative burden on residential properties has increased. At the municipal level, a great deal of property improvement involves non-profit and public uses. Projects of cultural, community and environmental value are critical, but not sufficient to increase the tax base, which is how we pay for things."
BDCC board members encouraged the development of better policy to support investment in commercial and industrial properties.
"Right now, Brattleboro needs to look at the roots of the problem," they wrote. "No proposals to improve the long-term productivity of our tax base are on the table, and all available bandwidth is focused on a yes-no vote on a short term fix."
They said a plan to invest at least some of the tax revenue in "long-term tax base growth would make some sense. Otherwise this latest tax debate is another short-sighted punt deferring the hardest decisions to generations to come, and it won't reverse the negative trends undermining the foundations of Brattleboro's economy."
Reach staff writer Chris Mays at email@example.com, at @CMaysBR on Twitter and 802-254-2311, ext. 273.
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