Finance Revenue and Bonding Committee

March 9, 2015

Frantz: Modifying the playing field now is pulling the rug out from underneath them.

Hartford, CT – Senator Scott Frantz (R-Greenwich) as the Ranking member of the Finance Revenue and Bonding Committee attended an emotionally charged public hearing today that included taxpayers, businesses and residents who spoke out against the administration’s proposed tax changes in the new budget.

“The citizens of this state pay a lot of money to live here. It has become increasingly difficult to live and work in Connecticut because of the burden of paying all these taxes,” said Sen. Frantz.

The administration’s plan contains significant incremental tax revenue totaling $915.6 million, $103.4 million of which is inflicted on individuals and $812.2 million on corporations.

The plan being debated includes:

  • lowering the state’s sales tax rate from 6.35 percent to 5.95 percent by April 1, 2017
  • eliminate the $50 sales tax exemption on the first $50 of clothing
  • delaying a planned increase in the personal income tax exemption for single filers
  • delaying an increase in the Earned Income Tax Credit program eliminate the $250 biennial business entity tax

capping the use of state tax credits by hospitals and corporations

If the state were to enact the changes that are recommended by the Administration, the impact in terms of the trust between the state and the corporate world would be irreparable.

Tax credits are earned based on expenditures that have already been made by companies. The Administration’s plan recommends capping the amount of tax credits that companies can utilize from the current 70% to 35% in Income Year 2015, 45% in Income Year 2016, and 60% in Income Year 2017 and thereafter.

“Modifying the playing field now is pulling the rug out from underneath them,” added Sen. Frantz.

Another part of the administration’s proposal discussed at the hearing; changes to alcohol sales and hours of operation. Connecticut passed Sunday sales several years ago at a wash in revenue to the state.

“When we introduced Sunday sales the administration forecasted $5 m in revenue gains. As far as I see it didn’t materialize,” remarked Sen. Frantz.

The administration’s budget secretary testified that the budget proposal seeks to collect $500,000 more in revenues through extending hours of sales and $2.8 million in additional revenue with a revision of the minimum bottle pricing.

Senator Frantz said, “The numbers in the current proposal don’t seem that impressive and it seems this will be a detrimental impact to retail sales for small package stores.”

Office of Policy and Management, Secretary Ben Barnes told legislators the governor proposed these changes not for revenue but for consumers to have greater convenience and pay less expensive prices. “We feel the role of the state in regulating hours should be minimal …the ability to compete on prices should be fundamental to our economy.”

Frantz questioned the overall effect on small retailers with this new proposal. The budget proposal continues through the legislative process. A final plan will be voted on in June.