Taxes and state spending

(April 4, 2008) As Connecticut ranks 38th in the U.S. for business tax climate, the business community has urged state lawmakers to improve the state’s position.

Specifically, legislators were asked to:
• reverse the erosion of taxpayers’ rights
• use tax policy to promote economic growth
• reject proposals to make business taxes more onerous
• reject efforts to shift more of the tax burden onto businesses.

Thankfully, lawmakers understood some of the concerns of the business community and are advancing a proposal that would level the playing field between taxpayers and the state.

This proposal ensures that taxpayers must prove their case by a “preponderance of the evidence,” the standard used in most civil cases.

But unfortunately, lawmakers didn’t heed all of what the business community has been recommending. On the minus side of the tax ledger, lawmakers also approved a measure to allow 18 municipalities to exempt up to $100,000 of the assessed value of residential property in computing property taxes, which will result in a considerable cost-shift to businesses.

This “homestead exemption” has been rejected by the General Assembly many times over the years. It would be particularly devastating to manufacturers that are heavily invested in machinery and equipment. It is also questionable policy since automobile owners would also be unfairly singled out and saddled with this cost-shift.

Another bill would weaken Connecticut’s economy further by imposing a new sales tax on certain delivery services that are not currently taxable.

While urging lawmakers to reject these latter two proposals, CBIA is still grateful to the Finance Committee for adopting the important change in the standard of tax review or increase our tax burden.

For more information, contact CBIA’s Bonnie Stewart at 860-244-1925 or bonnie.stewart@cbia.com.