‘Capitol Connection’ – Shoppers Save Nearly $8 Million

August 28, 2013

Last week, Connecticut shoppers had the opportunity to take part in an important annual tradition called “Tax Free Week.” During this week long event, families and individuals can purchase clothing and footwear under $300 without being charged the normal 6.35 percent sales tax. It is a perfect chance to get our children ready for the transition back to school.

Following some of the news coverage of the week-long event, I was surprised to learn from the Department of Revenue Services Commissioner Kevin Sullivan that Connecticut shoppers were expected to save about $7.8 million over the course of “Tax Free Week.” I find it concerning that Connecticut families contribute so much of their hard earned dollars to the state each week. At the very least, this tax-free shopping helps to provide a bit of well-deserved relief.

Along with tax-free shopping, I recently read a new study conducted by the Yankee Institute for Public Policy about the cost effectiveness of collecting taxes in our state. Called “Taxes Too Small to Keep,” the report researched how much it costs the government to collect taxes and fees. It also recommends policy changes for consideration by state legislators. This week, I would like to share some of these findings with you.

According to the study, our state relies on at least 371 different sources of revenue. These include the income tax, the sales tax, the gas tax, the business entity tax and many others. However, this new research reveals that the bottom 200 sources of revenue do not add up to even one percent of the state’s total revenue. The report asks the question: Are these taxes and fees really worth keeping?

Highlighting the challenges of calculating administrative costs, the report notes that most state agencies do not collect data on how much it costs to collect these sources of revenue. Despite these setbacks, the report estimated that collection costs for five state agencies range from the low of 24 cents per $100 collected to the high of $20 per $100 collected.

One of their recommendations is for state agencies to begin evaluating these administrative costs for each of the fees they collect. This would allow for a better understanding of whether certain taxes and fees could be phased out.

This new report certainly raises questions about the collection of taxes in our state. While lawmakers will have the responsibility to consider these recommendations, I believe it is constructive to regularly review how our state is run. If you would like to learn more about this report, I encourage you to visit www.YankeeInstitute.org.

Next February, the General Assembly will reconvene for a new legislative session. As always, these issues will likely be discussed along with many others that will undoubtedly be introduced. Until then, many families will be getting ready for the new school year. For those who are preparing to send their children back to school, I wish you and your family all the best!