ROCKINGHAM,Vt. - For Pat Fowler's New Hampshire customers, the devil in the details is the Vermont state sales tax.
"A lot of the (New Hampshire) customers mutter about the sales tax," Fowler said. "They will put down a book that costs $6.99 and I'll say '$7.41' and they'll say, 'Excuse me?'"
Fowler's Bellows Falls bookstore, Village Square Booksellers, sits just across the Connecticut River from tax-free New Hampshire. Fowler estimates 40 percent of her customer base is from that state. They are a loyal contingent, she said, but Fowler knows the sales tax can be enough to deter even the most committed patrons.
The issue has both immediate and longterm impacts, affecting customers' daily decisions on purchases as well as proprietors' choices on where they will set up shop.
A bill proposed in the Vermont House last week seeks to level the playing field for Vermont businesses disproportionately affected by the state's 6 percent sales tax. The bill calls for creating a Connecticut River Development fund to give added financial support to businesses along Connecticut and Passumpsic rivers. Money for the fund would come from 1 percent of revenues from the sales tax and would go towards supporting tourism and economic development along the areas most affected by competition in New Hampshire.
Rep. Mike Obuchowski, D-Rockingham, the bill's sponsor, estimated about $3 million per year would go into the fund to keep Vermont's economy stable along the eastern portion of the state.
"All the studies that have been done dealing with competition in New Hampshire show the Vermont towns are at a disadvantage," Obuchowski said. "It's difficult for some retailers to compete."
A study done last year by the Tax Foundation, a Washington D.C. organization that educates the public on tax policy, ranked Vermont 45th out of 50 states for business-friendly tax climates. New Hampshire ranked fifth.
Without getting rid of Vermont's sales tax, Obuchowski said stimulating regional tourism would be one way to balance that disparity. Bruce Hyde, Commissioner of the Vermont Department of Tourism and Marketing, said recent tourist promotions in Queechee and White River Junction have shown significant returns on rather modest investments. He said tourists come with money to spend and aren't likely to be as discriminating on where they spend it.
"Tourists aren't so concerned or knowledgeable about the Vermont state sales tax versus New Hampshire," Hyde said.
But for businesses like Community Feed Store in Westminster, where the clientele is more destination-oriented, promoting vacation packages will not help them compete with feed stores like Agway Home Yard & Pet across the river in Walpole.
"I don't see any direct benefit from encouraging tourism," said store owner Paul Clough. "The people that come in here are regular customers. They come here with an expressed purpose in mind."
The only thing that would help, Clough said, would be if Vermont were to get rid of its sales tax or if New Hampshire would establish one.
There is no push before the Vermont legislature to abolish the tax and New Hampshire Gov. John Lynch made his opposition to a broad-based tax central to his campaign last year.
Until that happens, Vermont retailers are doing what they can to stay competitive. Fowler said she began a frequent buyer's discount program, mostly to reach out to her New Hampshire clientele and keep them from going to Keene. She also holds readings, book signings and other promotional events which she said has established Village Booksellers as a community center.
Clough has owned the feed store with his wife Dania for 24 years. Like Fowler, they said they have been able to maintain a loyal customer base by rooting their business in the community.
Paul Clough admits that jumping across the river has been tempting but, for now, he and Dania said Community Feed will stay a Vermonter.
"This is a historic building," Dania Clough said. "People like this place. We don't want to move because of stupid taxes."