Toolbox
By Thatcher Moats
VERMONT PRESS BUREAU - Published: May 5, 2012
MONTPELIER — There will be a moratorium on the taxation of cloud computing services, the Vermont Yankee nuclear plant will see it’s annual generating tax go from $5 million to $12.5 million, and Vermonters 65 and older won’t have income from interest and dividends counted twice for the property tax income sensitivity calculation.
Those are the key agreements lawmakers on a conference committee reached late Thursday night after intense negotiations over the miscellaneous tax bill.
The bill was then approved by the Senate on Friday, and the House was expected to give a final sign-off Friday night, bringing to a close one of the must-pass bills of the legislative session.
The conference committee negotiations between the House and Senate were tough, said Sen. Ann Cummings, chairwoman of the Senate Finance Committee, particularly around the interest and dividends question and the cloud tax issue.
“We did end up — after much walking, soul-searching and begging — to get a moratorium” that extends to July 2013, Cummings told lawmakers.
Cloud computing is defined in the bill as accessing “prewritten software run on underlying infrastructure that is not managed or controlled by the consumer.”
Essentially, instead of a business having computer infrastructure and software on-site, it can contract with another company that has the equipment and software and use those services over the Internet.
The debate over whether to tax cloud computing services was the biggest tax battle of the session as influential businesses lobbied to end the cloud tax.
Many senators and the Shumlin administration wanted to exempt the services completely, because they say taxing the services would hurt Vermont’s growing technology sector and other businesses that use the cloud. But House lawmakers resisted, saying there wasn’t a strong enough case for exempting cloud services from the sales tax.
The moratorium is a compromise deal that will give time for the Legislature to study whether cloud taxes will be assessed, meaning the battle over that specific tax isn’t over.
The moratorium goes from 2006 to July 2013, so businesses have a chance to recoup any taxes they paid.
The increase in the Vermont Yankee nuclear plant tax replaces revenue that has disappeared because as two agreements between the plant’s owner, Entergy Corp., and the state expired.
Vermont taxes interest and dividends twice for the purposes of determining whether property owners should be eligible for income sensitivity on their property taxes.
It’s done this way, said Cummings, to make it harder for wealthy people to use a system designed to protect low- and middle-income Vermonters.
But lawmakers heard complaints from retirees that the double counting unfairly hurt them, thus the exemption from the double-counting for property owners over 65.
Once the House approves the final version of the bill, it will go to the governor’s desk.
thatcher.moats@
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