Two proposals have brought the prospect of a cloud tax as a new source of revenue back into legislative conversation. The Child Tax Credit, which would reduce revenue by $48 million, and Universal School Meals, which would need at least an $8 million appropriation from the general fund have both lead to the House and Senate considering a cloud tax. The cloud tax proposal approved by the House last year as part of S.53 would remove a tax exemption on software as a service and would create additional taxes on platform and infrastructure as a service.

If passed into law, consumers and nearly all of Vermont’s businesses that use cloud-based services would see considerable cost increases. This additional financial burden becomes particularly daunting for many businesses still struggling to recover from the pandemic while navigating labor force shortages and supply chain disruptions.