By Guy Page
A proposed Senate change to a House tax bill could make timber harvesting more expensive, with serious longterm impacts on Vermont forestland sustainability and the state’s $1.5 billion forestry products industry.
H.541, a revenue bill, would (among other measures) boost capital gains taxes by reducing the sale amount permitted for exclusion from 40 percent to 30 percent and adding a $450,000 cap on the exclusion. A recent proposed change would eliminate a House exemption for large sales of timber. If approved with this change, H541 would likely go to a House/Senate conference committee for resolution.
Many Vermonters think capital gains taxes are a headache suffered only by rich people with big stock portfolios. The timber tax increase would further burden a rural Vermont industry already challenged by a shrinking workforce, increased worker compensation costs, overseas competition, and declining demand for Vermont wood from the printing, furniture and construction industries. Still it supports about 10,000 mostly rural Vermont jobs, and by helping the forest recreation industry supports another 10,000 jobs, the Vermont Sustainable Jobs Fund said in January 2018.
Furthermore, trees are perhaps Vermont’s greatest carbon dioxide reducer. One acre consumes the Co2 equivalent of emissions by 62 vehicles, the Vermont Department of Forest, Parks and Recreation reported in 2016. Vermont forests store or “sequester” 1,758 million metric tons of Co2. Vermont’s total annual output of Co2 is about 8 million metric tons, the 2016 report said.
A spokesperson for the Vermont timber industry said Wednesday:
- For almost all forest landowners, taxes are the highest costs to holding forestland.
- This proposal can increase the tax on a timber harvest by as much as 30 percent.
- Landowners need stability on tax policy to be confident in their long-range forest management planning. This change can force a change in the planning horizon, perhaps jeopardize sustainability.
- The likelihood of forest fragmentation – selling and developing parcels of Vermont forestland – would increase with the holding cost of forestland. This tax increase could cause a landowner to lose enough investment value in forestland ownership and then decide to fragment his/her holdings.
- This tax will penalize people who have held and managed their land for longer periods of time – including land-rich, cash-poor rural Vermonters
Statehouse Headliners is intended primarily to educate, not advocate. It is e-mailed to an ever-growing list of interested Vermonters, public officials and media. Guy Page is affiliated with the Vermont Energy Partnership; the Vermont Alliance for Ethical Healthcare; and Physicians, Families and Friends for a Better Vermont.