The Chamber of Commerce and Business Association have done an excellent job of presenting a case against local options taxes. They worry about how this will affect our business community. The chamber suggests that because we can collect money more efficiently from property taxes, that is how we should pay for services.
Montpelier’s residential community deeply values our downtown and commercial partners. We have worried about our locally owned retailers and small entrepreneurial businesses. We support them by shopping locally and by investing property tax dollars in the downtown.
We make these investments because they make us a stronger, more vital community. We need to keep investing in our community, but we have stretched our property tax payers too far.
We have not heard about the burden our residents are facing. Many in our community live on small fixed incomes; many are state employees who have seen 3 percent and 5 percent reductions in their pay over the past three years.
All face the same rising costs of health insurance and energy.
We have not heard of the slow shift of paying for services to the residential sector. Twenty-five years ago, residents paid for about half of the cost of services. Today they pay for two thirds of these services.
We have not heard about who consumes Montpelier services. Montpelier has more employees per capita than any community except Williston. This distinction is part of what makes our community so vital — 20,000 people coming into town each day. And it is what makes our taxes so high — as we pay for the services they use.
Nor have we heard a clear explanation of who pays local options taxes. Rooms, meals and alcohol taxes are easy to understand — the people who rent a room, buy a meal or a drink will pay the additional 1 percent.
Sales taxes are more complex. There are lots of exemptions. Most food and clothing, farm equipment, residential heating fuel, vehicles, items bought for re-sale and many other items are exempt from the sales tax.
Specific data on sources of sales tax is not collected by the state. But one of our large businesses pays $175,000 annually in sales tax. Extrapolating from this it is safe to assume that the major employers pay at least half of the sales tax. This is the same commercial sector which draws people into the town and which has seen it’s share of property taxes rise at a slower rate than residential property tax payers.
We do know that less than half of the sales taxes paid in Montpelier will come from the people who shop locally. We do know that as the charter changes are proposed the local options taxes will reduce property taxes on the average residential property in Montpelier by about $150, in addition to investing an additional $100,000 in the business sector. And that if Montpelier passes local options taxes the average residential property tax payer would have to spend more than $15,000 to offset this tax savings.
We should not allow this conversation about local options taxes to devolve into a business versus resident debate. I hope we will carefully consider how we support the needs all of this community. How do we fairly share the responsibility of providing services to all in our community?
Mary Hooper is the mayor of the city of Montpelier.
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