Repeal tax on training services to boost competitiveness

(May 11, 2007) Connecticut’s economy must be competetive globally. A bill awaiting action in the House will make it easier for companies in the state to provide their employees with the training they need to stay competitive.

CBIA supports HB-7380, which in part attempts to repeal the sales and use tax on training services. Employers in Connecticut continually say that a skilled workforce is one of their biggest competitive concerns, and that the tax only serves as a barrier to the kind of training companies need to solve that.

CBIA is encouraging lawmakers to go further and repeal the sales tax on business analysis and management services in its entirety. Within that overall tax are levies on four types of business services that help companies train their workers or better manage their operations — training services, consulting and analysis services, public relations services, and management services.

Multisite corporations with headquarters in the state are especially harmed because Connecticut taxes them here for all of the services they may provide in their other locations.

Taxing these kinds of beneficial services only weakens the state’s business climate. Very few states tax business analysis and management services — including none of our surrounding states.

Voluntary compliance is extremely difficult as the rules pertaining to the tax are vague. What’s more, the interpretation of the rules change, expanding to services that never were considered taxable in the past, and the changes are applied retroactively.

Repealing this tax would be a positive step toward developing a long-range state tax strategy that will promote more business investment and greater economic development in Connecticut.

If an entire repeal of the sales and use tax on business analysis and management services is not feasible now, a repeal of the tax on training services and consulting and analysis services would still be a good start.

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

CBIA Action Center

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