Committee hears how sales, meals taxes feed Education Fund as exemptions shrink base

On Thursday, Jan. 16, the Ways & Means Committee heard a briefing from Joint Fiscal Office staffer Ted Barnett on consumption taxes in Vermont and their connection to the Education Fund. Barnett told the committee that consumption taxes are a significant revenue source — forecast at $1.34 billion in the July 2024 revenue forecast for fiscal 2025 — and that sales-and-use and meals-and-rooms taxes provide a sizable share of nonproperty revenue directed to the Education Fund.

Barnett said sales-and-use tax collections are dedicated 100% to the Education Fund and that 25% of meals-and-rooms tax revenues are allocated to the fund. "These two taxes make up a considerable portion of our nonproperty tax revenue sources that go to the education fund," he said. He added that in fiscal 2025 those taxes together were forecast to provide roughly $680 million toward nonproperty Education Fund revenues and that nonproperty revenue for the Education Fund was forecast at about $769 million.

The briefing outlined the main consumption-tax types collected in Vermont: the 6% sales-and-use tax on tangible personal property (unless exempted), the meals-and-rooms tax (9% generally; 10% on alcohol), and various excises on items such as motor fuel, tobacco and cannabis. Barnett noted changes from the prior session, including the removal…