Phil Scott’s tax gimmick: a one night stand

Lt Gov Phil Scott’s well-publicized economic pitch sessions — which he describes as a cross between a “Shark Tank show” and speed dating — took input from business leaders and self-selected legislators about how to rejuvenate the Vermont economy. This event is a little new gimmick the Lt.Gov. started recently. The conferrence showcases are organizationally a step up from his past Everyday Jobs Initiative publicity gimmick.

One piece of legislation resulting from the recent economic pitch session has been introduced, and (wait for it) … it’s a sales tax holiday! Seven Republican state representatives and three Democrats are sponsoring a bill declaring August 29th and 30th sales tax free; Phil Scott is selling it as part of his economic rejuvenation pitch.

As a result of input from Vermont’s business community at the “Vermont Economy Pitch,” held on January 7, lawmakers are responding by introducing bills aimed at growing the state’s economy.

 We have had these “tax holidays” several times before in Vermont: it is simply a period of time, one or two days, when the state suspends the tax on selected goods. The tax holiday gimmick reached a peak nationally in 2010 at 19 states, and then tapered off in 2014 with 16 states conducting them.

There's just one problem, and it's a big one: there is real doubt a tax holiday actually accomplishes much for the economy. Policy analysts find that sales tax holidays simply shift the timing of purchases and do not increase economic growth or significantly increase consumer purchases. They are a one- or two-day microburst of economic activity that would have happened over a period of time anyway. Then there is the added negative feature of some lost state revenue from the suspension of the sales taxes. Also, since sales taxes are somewhat regressive, suspending the sales tax gives small relief to low-income people and a large amount of relief to higher income shoppers.

The event may do little for the economy, but it is very effective at helping politicians look as if they are doing something — everyone loves a sale!

And maybe it shouldn’t be a surprise that a one-time-only feel-good sales event with no lasting effect is what results from Scott’s economic speed dating session. Sorta like a one-night stand: will there be regret in the morning?

One thought on “Phil Scott’s tax gimmick: a one night stand

  1. They went to school together and like to reminisce about the good old days when they bamboozled their gullible mates out of lunch money.

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