A Primer On Vermont's Sales Tax Holiday

(Editor's note:  This essay by Art Woolf is, undeniably, one of our greatest hits.  With the tax holiday coming up this weekend, we decided it was time to republish. Which we did ... as soon as we had stopped laughing.)

For those Vermonters who do not plan to spend the entire weekend in church or synagogue, July 12th and 13th present an opportunity to stimulate the economy. By shopping.  As a public service, we will attempt to answer some commonly asked questions about this nifty program.   

Okay, how does it work?

Simple. Buy stuff and the state won't charge you any sales tax.   

Wow. How much will I save?

You won't pay Vermont's 6% sales tax. And if you live in one of the towns with a 1% local option tax, you won't pay that, either!   

Double wow. Now I can buy that $5,000 Hi Def TV and home theater system I've wanted and I'll save $350!

Not exactly. Anything over $2,000 does not qualify.

Oh. Well at least I'll only have to pay tax on $3,000 of the $5,000 purchase. I'll still save something.

Didn't you hear me? You have to pay tax on the entire $5,000.    

Well, maybe I'll buy something cheaper. My 1993 Chevy Suburban is getting long in the tooth and it guzzles gas. I've had my eye on a used Toyota that gets 30 miles per gallon and the local dealer only wants $2,000. I'll save $120 in taxes if I buy it during the tax holiday.

 Sorry. That's the purchase and use tax. The tax holiday only covers the sales and use tax. You'll have to pay the full 6% tax on the car.   

Geez. Maybe I'll just take the family out to dinner. There's six of us. Dinner at Friendly's usually runs about $100 for all of us. At least we'll save money on the taxes. 

No. You're confused again. That's the meals and rooms tax. The tax holiday is only for the sales and use tax.

I am confused.  I thought the governor and legislature wanted us to go out and spend money to stimulate the economy. Why does buying $100 worth of electronics at Circuit City count as stimulating the economy, but  spending $100 at Friendly's doesn't. Don't both of those help the economy? In fact, doesn't more of the $100 I spend at Friendly's stay in Vermont, since there's a lot more labor involved in restaurants than in electronics stores? 

Sounds like you're thinking about this way too much. Anyway, you'll have to ask the governor or your legislator about that. I'm just trying to get you to spend more money.   

This may just drive me to drink.

That's good. I'd advise you to stick to beer. But don't buy it in a pub.   

Why not?

You'll pay tax on beer in a bar.   

I thought so. And if I pick up a six pack at the corner grocery?

No tax on that.   

Why?

Don't ask.   

I've been buying stuff in New Hampshire anyway. There's no sales tax there. Maybe I'll just continue doing that.

You know that state law requires you to report all purchases you make in New Hampshire and to pay Vermont's sales and use tax on that. 

Yeah.  Right.  What planet do you live on? So if I buy a $200 Ipod in New Hampshire I have to pay Vermont's 6% sales tax?  

No. Not if you buy it during the sales tax holiday. Any other time, yes.   

But I thought the point of the holiday was to stimulate Vermont's economy.  How does buying the Ipod in New Hampshire help Vermont's economy?

 You ask too many questions.    

Well, we've just remodeled the house. Maybe I'll buy a new washing machine. The new ones use less water and less energy, but they're pretty pricey. The one we're looking at goes for $1,500. 

That's OK. You don't have to pay the sales tax on it.

When did you say this tax holiday is being held?

It's Saturday and Sunday, July 12 and 13.

Darn.  I can't use my brother-in-law's pickup on the weekends and I need it to pick up the washer.

That's OK.  You can buy the washer between July 14 and 18 and still not pay taxes on it, as long as it's an Energy Star appliance.

And if it's not Energy Star?

Pay the tax.

OK.  That seems reasonable.  We're also thinking about replacing one of our old windows in the house.  It really lets in a lot of cold air in the winter, and at nearly four bucks a gallon for heating oil, we're trying to make the house tighter.

That's great.  But you'll have to pay the sales tax on the window if you buy it after July 14.    

Why? It's also Energy Star rated.

Yes, but it's a window, not a washing machine. Energy Star appliances aren't taxed between July 14 and 18 but Energy Star windows are.   

I'm beginning to understand.

That's good, because I don't. Did you ever see Abbot and Costello doing "Who's on First?"    

I don't think so.  So if I buy an Ipod on July 14, I don’t pay the tax.  July 15, I still have to pay tax.  July 14, I don’t pay the tax on the washing machine or the window.  July 15, I pay the tax on the window but not the washing machine.

Yep. Simple, isn't it?   

Actually, it sounds pretty confusing. How are store owners going to be able to comply with this. It sounds like it's going to be hard for them to program their cash registers and deal with all this. 

Don't worry. The state took that into account when it passed the bill and the Tax Department will reimburse retailers $50 for their programming costs.   

My son's a computer programmer. His company charges $150 an hour for their work. Fifty bucks doesn't sound like it's going to cover their costs.

Don't bother me with details. Anyway, the state will pay less if it costs retailers less than $50 to reprogram their registers. 

            And if it costs more?

We're sure it won't. But if it costs every store owner more than $50, then none of them will get $50.

Huh?  Does this have something to do with that "Who's On First" thing you mentioned?

Kind of.  But don't ask. 

I'm beginning to wonder if there might have been some better way to stimulate Vermont's economy. Maybe the state should just drop money out of airplanes and let people collect it. That might be more fun than just spending money.

 We tried that. It was called Act 60. It didn't work all that well. This will be much more successful.   

How do you know?

Trust me.

Comments

[doug]

I wonder if the state is going to watch for stores/customers who break purchases into multiple transactions.

[G. Cross]

This is what happens when you govern via slogans and not solutions. I can recall a few: "Clear and Clean" or is it "Clean and Clear"; "Operation Smooth Ride"; "Tax Holiday"; "Jim=Jobs"; and several with some part of affordable in each. Oh, but I remember they all would have done wonders for the state if it had not been for those pesty Democrats.

[James Ehlers]

Dear Mr. Cross,
What is your issue with "Clean and Clear"?

Sincerely,
James Ehlers

[GreggB]

Hilarious. Nice work Art.

[ACROB]

Can you buy 5 items for $2,000.00 each and not pay tax on any of them?

Have you seen an estimate of the state's revenue lost to the sales tax holiday?

[Jeff]

Jim = Jobs? What jobs?

Check out Route 100C between Johnson and North Hyde Park. Operation Bumpy Ride - really bad. One of many all over the state.

I bet George's problem with Clean and Clear is that it has accomplished nothing!

[Brattleboro_conservative]

I would remind everyone that New Hampshire has a sales tax holiday 365 days a year. Vermont can forget the sales tax holiday, I'm shopping at Walmart right over the state line. Oh, and I pay cash so that "Jim" and the DemocRATS in Montpelier can't tax me on my purchases come income tax time.

[Cynic]

Here's a simple bumpersticker idea for the Democrats:

JIM = JOBS ? NOT!