Weeks before this month’s vote on merger with its tax repercussions, Town staff encouraged the Economic Development Commission to study a Local Option Tax: how it might be implemented and spent, and what effects, if any, might there be on local businesses.

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Five staff members attended a special meeting of the EDC, held on February 22nd.

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Selectboard Chair Elaine Haney attended and expressed eagerness to generate revenue in ways other than property tax.

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The conventional wisdom is that a LOT would be at least partly funded by non-residents of Essex, helping to reduce the tax burden on property owners.

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Town Manager Evan Teich cautioned that if the LOT were assessed on meals, rooms and alcohol, its proceeds would vary with the health of the economy and not be a predictable source of revenue. Therefore, LOT revenue might best be used for capital expenses, rather than the General Fund Budget items.

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The State of Vermont will not identify the revenues generated by the LOT as being from the TOV vs TIV, and it will keep 31% as its processing fee. Town Manager Evan Teich noted that the State of Illinois takes a 2% cut.

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A memo from staff, dated Feb. 17th, suggested the EDC survey Essex businesses to determine how a LOT might impact them.

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Businesses outside of Essex should also be surveyed, suggested interim Community Development Director Owiso Makuku, to see how the LOT has affected their business, if at all.

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In addition to surveying businesses, a task force made up of two EDC members and staff will begin to meet non-publicly.

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Comments from the public noted that a LOT is a regressive tax. It hits low-income earners harder because it is a larger percentage of their incomes. 

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A question arose as to whether cell phones, cable and online purchases would be subject to the 1% additional tax. Staff agreed to look into it.

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We are only in the study phase, stressed Annie Cooper, EDC Chair. Public outreach would occur at a later date.