Taxes – the Beatles didn’t like them either - TAXMAN

But fees, they can bite just as much.

Here (2017 Fee Menu) is a spread sheet of the current fee increases and proposed new fees now under consideration by the House Ways and Means Committee.  There are almost 300 of them totaling near $26 million in increases. From farmers to car drivers to folks getting married, you’re on the list.

The biggest is a 100% increase in the mutual fund filing fee. The Governor’s recommendation is an increase from $600 to $1,200, raising $13.2 million.

But, there is a problem here. Under current Vermont law a fee is different than a tax, though both raise money. Taxes are for the general purpose of raising funds to support the broad functions of state government such as public safety, human services, natural resources, education, among many others. However, fees are different. Under Vermont law fees are associated with the support of very specific functions or services.

Current law now states that the rate or amount of a fee be “reasonably related to the cost of providing the associated service or product or performing the regulatory function. Cost shall be narrowly construed, but may include reasonable and directly related costs of administration, maintenance, and other expenses due to providing the service or product or performing the regulatory function.”

http://legislature.vermont.gov/statutes/section/32/007/00603

Now it’s certain that the cost of filing mutual funds at the Department of Financial Regulation has not increased by 100 percent, or $13.2 million. In fact, Governor Shumlin has explicitly proposed these new revenues be used to plug a revenue gap in Medicaid, a program far removed from the Department of Financial Regulation.

So rather than a fee increase, the Governor’s proposal is a tax increase…..a way to raise money to patch up the shaky financial footing of the state budget.  The Governor just finds it an easier political lift to call the increase a “fee” rather than a “tax”, despite what the law requires.

Readers might look over the above fee menu to see if any of these fee increases or new fees affect you. Further, while you look, keep in mind what the law requires of fees and decide whether you believe the increase or new fee fits these requirements. Then, if you have concerns, contact the committee members of the House Ways and Means Committee to voice your concerns. They are reviewing these fee proposals now and will make their recommendations shortly, so you’re input will be most timely.

This commentary is by Tom Pelham, formerly finance commissioner in the Dean administration, tax commissioner in the Douglas administration, a state representative elected as an independent and who served on the Appropriations Committee, and now a co-founder of Campaign for Vermont.