Retailers pushing back against Sales Tax hike

State lawmakers meet at the Capitol. (WTNH)

WETHERSFIELD, Conn. (WTNH) — Retailers across the state are speaking out against the latest state budget plan.

They say that the longer the state budget stalemate drags on at the Capitol, the worse it is for business. The proposed Sales Tax hike from 6.35%  to 6.85% is not going over very well with retailers; plus there’s a proposal to increase another part of that tax that would impact young people planning to get married.

Jewlery retailer Don Unwin of Sterling Jewelers in Wethersfield says that the longer the state budget stalemate drags out at the State Capitol, the bigger negative impact it has on local businesses like his, “The indecision is very disruptive to people’s psyche to buying and making decisions especially on bigger ticket items.”

Unwin says customers tell him that even though they may be comfortable in their jobs, there is concern about whether or not their employer might re-locate to another state; and he says the potential hike in the Sales Tax doesn’t help matters, adding, “The Sales Tax is just another brick on the wall and none of it is promoting a positive good feeling for business.”

What has not been widely reported is that the House Democrats budget plan also increases the so-called Luxury Tax, The portion of a diamond engagement ring that costs more than $5,000 is currently taxed at 7%. The House Democrats plan would increase that too, which Unwin says would impact many young couples just starting out, “The Luxury Tax isn’t just being paid by the fat cats that some of our lawmakers think it’s being collected from.”

The Connecticut Retail Merchants Association says that now is the wrong time to increase the Sales Tax for a very important reason. “The increase in the Sales Tax will drive more customers to the internet, less customers to their stores, will be harmful to the state’s economy and sort of defeat the purpose,” said the association’s Tim Phelan.

That’s because raising the Sales Tax is designed to raise more money but if more shoppers flee to internet sites that don’t collect the Tax the state could end up collecting even less.

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