Fasano on Democrat Sales Tax Hike Proposal: “It’s just going to hurt us”

Article as it appeared in the REPUBLICAN-AMERICAN

A top Democratic lawmaker is sponsoring legislation to raise the state sales tax from 6.35 percent to 6.85 percent to help cities and towns.

Senate President Martin M. Looney, D-New Haven, Paul Hughes Republican-American

Senate President Martin M. Looney, D-New Haven, is proposing to generally allocate revenue from the 0.5 percent increase to municipalities where the sales occur.

In the case of regional shopping malls, the legislation proposes to distribute 60 percent of the additional revenue to the municipality or municipalities where the shopping center is located, and the other 40 percent to bordering communities on a per-capita basis.

Looney said he is recommending retailers remit the additional revenue from the increase directly to municipalities.

The Democratic leader’s proposal is the first to recommend an across-the-board increase to a major state tax.

The sales tax was last increased in 2011, when the rate was increased from 6 percent to 6.35 percent. A 7 percent rate for certain luxury purchases was also established, and the luxury rate was increased to 7.75 percent in 2015.

“We would oppose any kind of increase in the sales tax,” said President Timothy Phelan of the Connecticut Retail Merchants Association.

He said the retail industry is already contending with proposals that could increase cost of doing business and consumer prices, including raising the minimum wage to $15, regulating the setting of worker schedules, taxing or banning plastic shopping bags, and establishing paid family and medical leave.

“On top of that, we are going to ask consumers to pay more in sales taxes. That is bad for retailers and consumers,” Phelan said.

The sales tax is the second largest tax after the personal income tax. The latest revenue estimates project receipts of $4.3 billion for the current 2019 fiscal year – $137.3 million more than budgeted.

Senate Minority Leader Leonard A. Fasano, R-North Haven, said increasing the sales tax in the current economy would be a mistake. He called Looney’s proposal the wrong idea at the wrong time.

“It is just going to hurt us,” Fasano said.

He said he is also concerned the state eventually would claim all of the additional revenue. He said this is what happened after 1 percent of the sales tax revenue was dedicated in 2015 to support municipal aid and the Special Transportation Fund.

Looney said he is proposing to have retailers directly remit the additional receipts to cities and towns to protect against that from happening.

“It wouldn’t come into the state’s possession necessarily. Obviously, there are different ways to structure it, but that is the one that probably would give more comfort to the towns that they would be in control of that money,” he said.

“If it’s going to help us maintain what we get from the state, I guess I could support it,” said Prospect Mayor Robert J. Chatfield.

Looney’s legislation was referred Thursday to the Finance, Revenue and Bonding Committee. No other legislators cosponsored the tax bill.