Low Support For Payroll Tax Increases Opportunity For Sweetened Beverage Tax
A plan to use a new payroll tax to help reduce the Medicaid cost shift faces growing opposition at the Statehouse, which means a sugar sweetened beverage tax may be the preferred option.
Legislation approved by the House Health Care committee used two new revenue sources to pay for a $45 million package of health related programs. On the policy side, the plan boosted Medicaid reimbursement rates to reduce the so-called Medicaid cost shift; it increased state subsidies that are available on Vermont's health care exchange and it provided more money for the Blueprint for Health and the Green Mountain Care Board.
The proposal was financed by a three tenths of of 1 percent payroll tax and a $.02 per ounce tax on sugar sweetened beverages.
Calais Rep. Janet Ancel, chairwoman of the House Ways and Means committee, says there isn't a lot of support for the payroll tax. "It's a new tax, no other state does it. There are multiple thousands of taxpayers we would impact and the implementation costs are fairly significant, really steep relative to other taxes,” she says.
Ancel says the committee is looking at various options for the sugar sweetened beverage tax, including lower rates and the possibility of adding diet beverages under the scope of the tax as a way to raise more revenue. "At this stage I don't want to handicap anything,” she says. “But I think there is a bit more interest in the sugar sweetened beverage tax in the committee."
"At this stage I don't want to handicap anything. But I think there is a bit more interest in the sugar sweetened beverage tax in the committee." - Rep. Janet Ancel, chairwoman of the House Ways and Means committee
In the end, Ancel says her committee will likely pass out a smaller overall tax package and then let the House Health Care committee determine the best way to spend the money. "They've done all this work on the policy issues that are reflected in their bill and I think they really are in the best position to decide how to spend the money if it's something less than what they recommended,” says Ansel.
House Speaker Shap Smith supports the payroll tax and has concerns about using the sugar sweetened beverage tax because he views it as a declining revenue source if consumption does indeed go down.
"If we don't address it either this year or in the next few years, I think it could put at risk access to health care in rural areas of the state." - House Speaker Shap Smith
He says one option might be to phase in the higher Medicaid reimbursement rates. But he's worried that access to primary care providers in the rural parts of Vermont could be affected if the Medicaid rates aren't increased in the near future. "I think that that could be one possibility … And if we don't address it either this year or in the next few years, I think it could put at risk access to health care in rural areas of the state,” he says.
The House Ways and Means committee is expected to vote on its health care related tax package by the end of the week