Tax ‘reform’ proposal would be business tax increase
 

(April 18, 2008) Most state lawmakers have said that they don’t want to damage the economy by raising taxes this year, but two proposals could significantly increase taxes on different groups of Connecticut employers.

And that’s very troublesome, because not only are we in an uncertain economy, Connecticut already has a business tax climate ranking of 38th in the U.S.
SB-701 would allow the local governments in 18 “targeted investment communities” to exempt the first $100,000 in assessed value from most residential properties in computing the local property tax.

Known as a “homestead exemption,” this proposal would shift millions of dollars in taxes onto renters, car owners and commercial and industrial taxpayers.

That’s not property tax reform, but a tax increase, and a substantial one at that, on renters, car owners and businesses during a very difficult economic period.

The property tax burden on small businesses and manufacturers, two types of businesses that cannot afford higher taxes, would jump. Manufacturers would be hit particularly hard because they own large amounts of personal property and would likely absorb more of the shift than other types of businesses.

The 18 municipalities are Bloomfield, Bridgeport, Bristol, East Hartford, Groton, Hamden, Hartford, Meriden, Middletown, New Britain, New Haven, New London, Norwalk, Norwich, Southington, Stamford, Waterbury, and Windham.

Delivery sales tax
Also proposed is a new sales tax on delivery services that would affect deliveries of parts, small packages, documents, food and other items still to be identified (HB-5844).  Not only will it hurt businesses that deliver the goods and who rely on those deliveries, it will also affect consumers who may have to absorb the additional sales tax.

This proposal will not help Connecticut’s economy, but make it more difficult — and less desirable — to do business here.

Restores fairness
One very positive tax measure is SB-702, which would level the playing field between taxpayers and the state. The proposal would ensure that taxpayers must prove their case by a “preponderance of the evidence,” the standard used in most civil cases.

  Because the state invests considerable power in its taxing authority, taxpayers should at least have a level playing field in court. On balance, the tax court has been a fair arbiter of tax cases, but SB-702 is needed to make sure that we maintain that level playing field.

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