Intern Abbott outlines proposal to round cash transactions, raising questions about accounting and equity

An intern, identified in the transcript as Abbott, told the Brevard House Committee on Commerce & Economic Development on March 27 that H 8 37 would round cash transactions to the nearest amount divisible by five cents, with amounts of 1¢ or 2¢ rounded down and 3¢ or 4¢ rounded up.

Abbott said the bill would require businesses that round cash sales either to calculate tax on the pre-rounding amount and to track both pre- and post-rounding totals for accounting and tax purposes. On refunds, Abbott said the refund amount would be based on the rounded amount that had been charged.

The presenter gave preliminary economic estimates for Vermont: a rounding regime that consistently rounded one way could affect total transactions by about $90,000 per month or about $1,100,000 per year, and an average Vermonter would see roughly $0.14 per month (reported in the transcript as 14¢ a month) or roughly $8.68 per year. Abbott warned that the burden of cash use is not evenly distributed, saying lower-income people tend to use cash more and would therefore be disproportionately affected.

Abbott cited international and U.S.-based studies. She said Canada, which phased out the penny in 2013, showed evidence of a so-called "rounding tax" in some studies: retailers may price items ending in .09 so that short transactions round up and the store gains a small amount over time. One study Abbott cited found an average additional revenue of 157 Canadian dollars for grocery stores in some samples; another U.S. estimate cited in Abbott's presentation suggested a national impact of just over $6,000,000 and an average effect of about $0.02 per American per year.

Committee members asked Abbott follow-up questions about the age of the studies and the evolution of point-of-sale systems since the cited research. Abbott said the primary study she referenced was from 2018 and acknowledged that point-of-sale technology has changed, which could affect outcomes. Members also asked whether any U.S. state had adopted a similar law; Abbott said she did not believe any state had done so, though some states were considering the idea and retailers had requested a consistent state standard.

Committee members raised two practical issues: possible retail behavior that could produce a rounding-based transfer from consumers to merchants (the "rounding tax"), and the administrative burden on businesses required to track pre- and post-rounding amounts for sales tax. Abbott said she had included sources in the written materials and would provide additional documentation if requested.

The committee’s chair thanked Abbott for the report and directed staff to follow up; Abbott indicated she would provide the cited sources and any additional data requested.

The committee did not take formal action on H 8 37 at the March 27 session; Abbott’s presentation was for informational purposes and the committee asked staff to gather additional information for future consideration.