Hidden Taxes 
By Bruce Shields 

The level of taxes paid by Vermonters is presently a subject of controversy.  Several think tanks identify Vermonters as paying the highest rate in the nation.  Yet recently some legislative leaders argued that Vermonters really do not care how high their taxes are.  One problem is that many Vermonters do not know how much they pay in tax.  Huey "Kingfish" Long of Louisiana is reputed to have said, "Don't tax me, Don't tax thee, Tax that man behind the tree."  Huey was ingenious at confusing people about how much they really paid.

Vermont legislators have recently boasted of shifting the property tax burden onto non-resident property owners.  That is just one kind of hidden tax on ordinary Vermonters.  Some hidden taxes are disguised as fees: for instance, every corporation must now each year pay at least $250 to maintain its registration within our state.  The license to operate a truck, depending on its capacity, may cost up to several thousand dollars annually.  Many truck operators are required to buy a weight permit in each town the truck enters.  These are just a few of the imposts faced by a basic Vermont business -- every penny of which must be charged to that business’s customers.

But the property tax may be the most effective tool used to disguise the real source of taxes paid.  For instance, the real estate (transmission lines, substations, and transformers) of Electric Utilities is taxed by each town.  Telephone company property is exempt from property tax, though subject to Statewide communication taxes, proceeds of which go to Montpelier, not to towns.  To shift as much of the local tax burden as feasible to deep pockets, many towns assessed utility property very high.  Consequently the ad valorem real estate tax consumes a substantial portion of utility revenue, higher in thinly populated rural towns.

In one small town, using very round numbers, utility property represents about 5% of the town's Grand List; taxes may represent 5% of the utility gross receipts in town.  No single report discloses that level of tax.  Buried in the formal financial reports of the utilities, it never shows up as a line item on customer statements.  Many utility customer bills lump a variety of direct imposts and fees such as contributions to low income fuel assistance under the mysterious heading of Customer Charge.  Phone bills also contain cryptic lines such as Regulatory Charge.  Listed fees range from nearly 20% of the total bill for small retail users down to about 10% for customers in the normal sized household. In addition to the cryptically titled tax and fee lines, the property tax represents possibly another 5% in undisclosed direct cost to the consumer.

The recent proposal to shift even more tax onto non-residential and business property can only mean that in fact private homeowners will pay ever higher surcharges each time a truck makes a delivery, each time they use the phone or turn on a light, hire a maintenance person or craftsman.  Taxing a company does not save the consumer anything at all: it merely disguises the route by which the tax is paid.  It feeds the public perception that vendors are price gouging, and in the long run makes rural poverty ever deeper, ever more intractable.

Bruce Shields has retired from three professions; college English teacher, sawmiller and executive of the Vermont Forest Products Association, and operator of a farm supply store.  In retirement, he works his woodlot and maple sugar place, sits on the boards of several statewide organizations related to natural resources, and serves as Lister in the town of Eden, VT.