RAY DUNAWAY: Will The State Sales Tax Increase?

Feel like you have too much money in your pocket that you need to get rid of? Well, the legislature may want to help you with that.

It looks like the bag tax will happen, and tolls aren’t necessarily going away, and now a possible increase to the already high sales tax may be on the table. There is pressure to make this happen, since raising the sales tax could reportedly generate over $1 billion for the state.

Ray Dunaway talks with Tim Phelan, President of the Connecticut Retail Merchants Association, to find out the mechanics of this idea.

Phelan explains that 470,000 people in the state work in retail. When people think about jobs in retail, people often think about front end jobs, but there’s thousands of behind the scenes jobs that you might not see – in logistics, or IT – and as Dunaway points out, there are also the jobs in the stock room.

“We do have a number of distribution centers in Connecticut,” says Phelan, “along with a couple of corporate headquarters located in the state.”

“Well, we do for now,” quips Dunaway who then asks, “What exactly is the legislature proposing?”

“Right now it’s a general discussion around the sales tax,” says Phelan. “One idea is to increase the overall rate…or lower the rate and broaden the base. The finance committee that has jurisdiction over this issue and has not yet reported a bill, so we don’t know exactly what we’re dealing with.”

“It’s weird when you look at the things that are exempt,” says Dunaway, “there’s clearly politics involved in that.”

“It’s hard on you guys,” continues Dunaway,”because you have to collect that (tax), and you’re also concerned about the cost of buying things in Connecticut in a brick and mortar store.”

“On-line shopping has increased pressure on brick or mortar retailers more then we’ve ever seen,” explains Phelan.

The retail business has always faced challenges. On-line shopping is not only convenient but also cost effective when buying sans a sales tax. An increase in the state sales tax will only accelerate these challenges.

Because the pension burden has been put on individual municipalities, there’s also been talk of a local sales tax on top of what may happen state wide.

“A local sales tax option is something we would oppose,” says Phelan. “We testified against that in the finance committee…that would add a complexity to the system that is unnecessary…we really hope that’s something they don’t consider doing.”

Dunaway concludes with the point, that although they say $1 billion dollars could be generated, “who knows where that would really end up.”

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