Local Option Tax A local option tax allows municipalities to - - PowerPoint PPT Presentation

• A local option tax allows municipalities to generate more revenue by adding an

extra 1% to the sales tax in addition to the 6% state rate; a 1% meals and room tax in addition to the 9% state rate; and a 1% local alcoholic beverage tax in addition to the 10% state rate.

• The additional revenue raised by the local option tax is divided: 70% goes to

the municipality and 30% goes to the state. The 30% of the revenue that goes to the state is used to reimburse municipalities for state-owned buildings in their towns and to cover the state’s administrative costs of operating the program.

• Twenty Vermont municipalities, including the towns of Manchester, Rutland

Town, Wilmington, and Brattleboro, have a local option tax on sales and/or meals, rooms, and alcoholic beverages.

Local Option Tax

Retail Sales Meals Rooms Alcohol TOTAL 1%

FY19

$141,170,000 $31,887,828 $7,555,710 $4,188,704 $184,802,242 $1,848,022.42

FY18

$140,337,000 $30,957,891 $7,636,497 $4,199,767 $183,131,155 $1,831,311.55

FY17

$131,734,000 $29,625,000 $7,591,000 $4,169,000 $173,119,000 $1,731,190.00

FY16

$131,903,000 $28,609,000 $7,005,000 $3,964,000 $171,481,000 $1,714,810.00

FY15

$129,843,000 $27,306,000 $6,918,000 $3,673,000 $167,740,000 $1,677,400.00

Bennington sales tax revenue from FY 2015-2019

According to Bennington’s FY2019 tax data from the Vermont Department of Taxes: 1% Retail Sales $141,170,000 $1,411,700. Meals $ 31,887,828 $ 318,878. Rooms $ 7,555,710. $ 75,557. Alcohol $ 4,188,704 $ 41,887. TOTAL: $1,848,022. The Town would receive 70% of the 1% tax. This would total: $1,293,620.

Exemptions from Sales Tax include:

• Groceries-food and beverages
• Prescription and over the counter medications
• Medical equipment and supplies
• Fuel for home heating
• Clothing
• Motor Vehicles (are subject to purchase and use tax by Agency of

Transportation)

• Farm equipment
• Energy for manufacturing

On-line retailers are subject to sales tax and local option tax

Examples of local option tax revenue spending in other communities:

Manchester: Property tax reduction, town infrastructure, recreation park facilities, marketing Rutland Town: Property tax reduction, police department, municipal budget Wilmington: Matching grant fund, revolving loan fund, community events, community programs Brattleboro: Property tax reduction, sustainability fund, marketing, arts programming

Proposed Select Board policy for using any local option tax revenue

The Bennington Select Board recognizes the importance of community dialogue and input during the annual budget sessions and will establish two additional public meetings every year during budget season to designate spending guidelines for any revenue created from a local option tax.

Proposed spending of local option tax revenue for next fiscal year

Total 1% Proposed Breakdown Local Option Tax 50%Tax Reduction $646,810.00 20%Debt Reduction $258,724.00 (FY21 $528,910.00) 20%Community Built Park $258,724.00 10%Marketing $129,362.00 (FY21 $50,00.00) TOTAL 100% $1,293,620.00

Property Value: Savings: $100,000 $95.55 $150,000 $143.33 $200,000 $191.11 $250,000 $238.88

Proposed Property Tax Savings