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Committee debates sales‑and‑use tax relief for building materials; votes to strike proposal for now
Summary
Committee members reviewed a proposed sales‑and‑use tax exemption or rebate for materials used in affordable housing developments, sought analysis from the Joint Fiscal Office and the Department of Taxes, and by committee consensus removed the provision from the bill pending further work.
Committee members on Feb. 28 debated a draft provision that would exempt or rebate sales‑and‑use tax on building materials for projects tied to affordable housing. Cameron Wood, Office of Legislative Council, summarized that the draft tried to limit tax relief to affordable housing so it could be administered by the Tax Department and VHFA. "This is the latest version of that language," Wood said, but he noted it "has not been endorsed by the tax department."
Chad Simmons, Vermont Housing Finance Agency, told the committee VHFA and Vermont Housing Conservation Board had looked at the draft and raised administration concerns about how to apply an exemption in conjunction with the federal low‑income housing tax credit and the timing of construction. He described an alternative: a rebate approach in which the developer pays the tax at purchase and then receives a rebate, a mechanism other states have used. "We shared the list of those states and then an example, Minnesota," Simmons said.
Committee members repeatedly asked for fiscal analysis. Wood said the Joint Fiscal Office (JFO) attorney had told staff they could run a fiscal analysis and make it available before the committee's next vote. Several members stressed that without a clear fiscal impact on the Education Fund (Ed Fund) and an operational definition of "affordable housing" that the Tax Department can administer, the proposal was premature. One member said, "I don't think it's ready for prime time" and later the committee chair stated, "So we're striking this. K." Committee members agreed to continue conversations with Tax Department and other partners and to revisit the idea in a more developed form or through a separate Ways and Means review or a Senate bill.
The committee did not adopt new tax relief language and asked staff to arrange further technical meetings and JFO analysis; no formal roll call vote on the tax relief language was recorded at this meeting.
