February 12, 2015

It has been a busy two weeks under the Golden Dome, with new lawmakers being brought up to speed on both process and issues, and all of us bringing to the forefront issues of concern to us and our constituents. 

I am pleased to report that just as former Representative Paul Ralston and I at Vision to Action Vermont and Lt. Governor Phil Scott had hoped when organizing the Day One Economy Pitch on the first day of the session, economic issues continue to receive much more attention than in years past.  

In fact, it is exciting to see many of the proposals pitched at the Economy Pitch have found their way into legislation being promoted by members across the political spectrum.  

One of those is my renewed effort this year to ensure software as a service is no longer subject to the Vermont sales tax.  I have introduced H. 146 to do just that.

Joined by Republicans, Democrats, and Independents, H. 146 would do precisely what many of us have been advocating for throughout the last four years - it would exempt the cloud from taxation.

For background, cloud computing is the delivery of computer software over a shared network.  In 2010 the Vermont Tax Department issued a Technical Bulletin that at a later date, under the Shumlin Administration, was reinterpreted by the Department to charge sales tax on cloud computing services.

In my view, and the view of many, the Department at that time superseded legislative intent and approval in instituting this tax. But over the course of the years, when we did have the authority and the ability to eliminate this tax on services, the legislature and Administration chose not to do so, thereby leaving in place the 6% tax.

As Rep. Ralston was fond of saying (paraphrasing Yogi Berra) “Business is 90% psychological.  The other half is financial.”

Simply put, the cloud tax has sent the wrong message – both to the world of technology and to our small businesses.  The small amount of revenue it may have generated over the years has not been worth the negative impression sent about Vermont's business climate.

In fact, the tax is so confusing and difficult to administer that the Tax Department has yet to develop the regulations for it.  Even more, as much as they talked about the loss of revenue if we were to not tax software as a service, nobody can actually tell us how much has been collected through this tax over the years.

For all of these reasons, I am hopeful that our effort this year to eliminate this tax will be successful.  It is time to make clear to our entrepreneurs and small businesses that the imposition of this tax was wrong, and that it's time to put an end to it.