HARTFORD, Conn. (WTNH) — Democratic State Lawmakers are talking about a hike in the state “Sales Tax.” It’s being seriously considered as way to address the state’s red ink problem. But Republicans and retailers oppose the idea saying it could result in less revenue for the state.
Back in 1991, the Connecticut “Sales Tax” was a whopping 8 percent, but we had no “Income Tax.” Part of the deal to pass the “Income Tax” cut the “Sales Tax” to 6 percent. Critics at the time said it was just a matter of time before it went up again. Well, it’s started.
The Connecticut ‘Sales Tax’ was increased to 6.35 percent by Governor Dannel Malloy and the legislature six years ago. It was also extended, for the first time, to clothing under $50 and non-prescription drugs. Prior to six years ago, that tax was zero and the tax on everything else was just 6 percent.
As a way to address the state’s $1.7 billion deficit next year, increasing the rate of the “Sales Tax” appears to be on the table again for Democrats in the General Assembly.
“I don’t think anybody wants it to go above 7 percent so whatever it is I think we’re talking below 7 percent,” says House Speaker Joe Aresimowicz (D-Berlin).
Like the Governor, legislative Democrats see spreading the pain among the towns as necessary, but this is seen as a way to make it a little easier.
“Sales Tax quite possibly to do some sort of municipal tax revenue that they could look at other than ‘Property Tax,'” said Aresimowicz.
The Republican leader in the Senate, Sen. Len Fasano of North Haven, notes that promise has been made before and broken before.
“They promise; ‘hey we’re just going to take it, we’re going to give it right back to you, we promise.’ But we suck it up like a vacuum cleaner, we never give it back,” said Fasano.
Tim Phelan represents the Connecticut Retail Merchants Association.
“We’re hopeful the legislature won’t go in that direction. Increasing the ‘Sales Tax’ at this time wouldn’t be helpful for consumers and would not be helpful for retailers,” said Phelan.
Retailers across the state are pushing hard against this idea and note that increasing the ‘Sales Tax’ could actually result in the state getting less revenue instead of more.
“It’s another reason for consumers to purchase something on the internet, not go into a brick and mortar store. The state doesn’t get the ‘Sales Tax’ when you purchase something on the internet and the local retailer suffers from that,” said Phelan.
The Speaker of the House says Democrats are also considering a new tax rate on ‘Capital Gains.’ Another one of the deals that brought us the “Income Tax’ back in 1991 was a cut in taxes on “Capital Gains.”