House Approves Clean Water Funding Plan with $6 million ‘Cloud Software’ Tax
Friday, May 10, 2019
Posted by: Jeff Couture
Vermont’s House gave preliminary approval to a clean water funding plan that includes a new $6 million sales tax on cloud software.
In a vote of 124-14, lawmakers gave preliminary approval to S.96, a bill that directs new funds to federally mandated pollution reduction projects across the state.
The funding plan involves taking 4% of the rooms and meals tax from the education fund — about $7.6 million — and permanently dedicating it to fund clean water projects.
To replace the money from the education fund, House members moved to levy a tax on cloud software: software programs stored and accessed by users over the internet. Fiscal analysts said the new tax would generate about $6 million in revenue.
Lawmakers say that with other revenue proposals — including a sales tax on veterinary supplies and a tax on third-party online marketplaces like eBay, Amazon and Etsy — the plan will fill the gap in the education fund.
Vermont used to levy a sales tax on cloud software users, but repealed the tax in 2015.
At the time, few states were taxing cloud software. Now, 17 other states have introduced similar taxes. Lawmakers said they are now less concerned the new levy will hurt business.
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