News release from Governor Malloy:
Governor Dannel P. Malloy today announced that the biennial budget that he will unveil on Wednesday includes a plan to lower the sales tax to 5.95 percent–the lowest level the state has seen since 1971–by reforming the sales tax and eliminating certain exemptions.
Under the plan, which is designed to support the middle class, the sales tax will be reduced in two phases: from the current rate of 6.35 percent to 6.2 percent on November 1, 2015, and then down again to 5.95 percent on April 1, 2017.Eliminating minor exemptions will allow the entire sales tax to drop for almost all items, saving residents money on almost all purchases. The proposal would eliminate the exemption from the sales tax for clothing–which was scheduled to begin on July 1, 2015, but is currently not in existence–however during the annual “Sales Tax Free Week” in August, no sales tax would be owed for clothing costing less than $100. The lower sales tax rates will save consumers $70 million in FY 2016, $155 million in FY 2017, $300 million in FY 2018, $311 million in FY 2019, and $323 million in FY 2020.
“My goal is to support, stand with, and expand Connecticut’s middle class. By reforming our tax system, we’ll be able to lower the cost of almost all items–for everyone,” Governor Malloy said. “Our economy continues to improve, and the state is seeing the largest private-sector job growth since 1998. By streamlining and simplifying our sales tax structure, we can give working families the lowest sales tax level in four decades.”
Presently, the sales tax is 6.35 percent. It was 6 percent from 1991 to 2011, between 7 and 8 percent from 1976 to 1991, and 6 percent in 1975.
Governor Malloy is scheduled to present his biennial budget proposal to a joint session of the General Assembly at noon on Wednesday.
Any tax reduction sounds pretty good I guess, but in a week when you have to face a billion dollar budget variance over two years, the opportunity to offer something fragile up front to the “middle class” must have seemed most necessary. When you get down to the real numbers and have to make those decisions, we’ll begin to see what realism, ingenuity and know-how is present to work our way out.
Not for nothing, but I have worked 50 years since college with my own business that depended on sales and service. Normal retirement age was over 65 as Social Security has also adjusted but local and State retirement plans for non-retired folks still avoid the learning curve of for-profit business–it takes more than 20-25 years to set up a steady flow of retirement revenues (from personal and employer contributions) that will last a period of 30 years or more. And why is the public tasked with guaranteeing the risks of a retirement plan rather than the employee? Where is the public discussion? Can we continue to afford the shorter day or workweek, the major healthcare expenses, the pension guarantees and an elected leadership team that does not evaluate the work performed to be sure results in the workplace justify the income and benefits? Time will tell.
It seems he is proposing to lower the rate but tax more things. This could be a tax increase in disguise. We need the details to know for sure. Mayor Finch played this game during the last reval when the mil rate was not reduced enough to account for the increase in the taxable grand list. The result was a tax increase and not a tax cut as he claimed.
The sales tax is the only tax that gives the citizen the ability and freedom to pay or not to pay. If the sales tax on the 48″ TV is too high, then you buy the 42″. This puts the power of the decision making in the hands of the customer. It’s the income and property taxes that should be cut.