For Immediate Release
Feb. 9, 2009

BUSINESSES OPPOSE COSTLY TAX MEASURES
Urge Finance Committee to reject job-killing bills that would further hurt our economy

The Connecticut business community is opposed to several harmful tax bills before the Finance Committee that would cost jobs in Connecticut and seriously damage our businesses’ ability to compete and recover from the recession.

Proposals to hike taxes, shelve tax credits, and make it harder to use them are clearly dangerous to Connecticut’s economy, and all would push employers into making very difficult decisions.

“If enacted, these proposals would result in less investment in Connecticut and fewer jobs at a time when we desperately need more of both,” said John R. Rathgeber, CBIA president and CEO.

If enacted, the proposals would:

• Eliminate virtually all exemptions to the state’s sales tax, including those for manufacturing machinery and equipment (HB-6350); impose the sales tax rate of 5%
• Extend the state sales tax to virtually all professional and business services (HB-6349)
• Place a two-year moratorium on the use of all corporate tax credits (SB-815)
• Significantly restrict the ability of Connecticut companies to use corporate tax credits and reduce the effectiveness of those credits (HB-6348)
• Impose unitary reporting under Connecticut’s corporation business tax. (SB-807)

Gov. Rell has proposed no tax increases in her budget because of concerns about the impact higher taxes would have on businesses, individuals, and the economy.

“Many other states are choosing to expand their way out of the recession by encouraging business development,” said Joseph F. Brennan, CBIA senior vice president of public policy. “The Finance Committee and the legislature must take actions to promote economic recovery, not hinder it.”

Already, CBIA is hearing from businesses that the Finance Committee proposals, if adopted, would make it significantly harder to do business here and could force companies to question Connecticut as a viable place in which to operate. Businesspeople from across the state submitted letters to their legislators asking them to reject these job-killing bills.

Here is a sampling of some of the letters.

• These bills will reduce job growth and future investment in our state, resulting in the potential significant loss of job growth and prolong the current economic recession.  As our state legislators, you must act responsibly to reduce cost of government and not impose additional taxes on businesses or residents, especially during these worsening economic times when businesses and individuals are struggling for survival.
  Peter Kent, CEO and chairman, Bicron Electronics Co., Canaan

• The Siemon Company has been in business in Connecticut for more than 100 years and is a fourth-generation family-owned business with about 400 employees and many local suppliers. We owe our long history to our ability to continually innovate and stay competitive through effective cost control. These proposals would substantially increase our business costs and make it much harder for us to continue doing business in Connecticut.
  Carl N. Siemon, The Siemon Co., Watertown

• Any further tax increases on manufacturers would deteriorate the marginal benefits of being a business in Connecticut. It will improve the payback on moving to a more business friendly state, leaving our country, or simply closing up shop. Manufacturing jobs have the highest multiplier to create other jobs in the economy. There are three jobs dependent on every one manufacturing job. That means there are roughly 680 jobs that are dependent on the decisions I make, and the actions of government will impact my decisions. If any of the measures pass, it will effect these decisions in a way that would have a negative impact on state revenue and our economy.
  Bruce Dworak, president, Hobson Motzer Inc., Durham

• If enacted, these bills will drive existing jobs out of Connecticut, and they will make it less attractive for current or potential employers to invest, grow, and create jobs in our state.  Even the mere fact that you are considering these taxes is troublesome, because you are creating uncertainty for decision-makers.
  Lawrence F. Clark, chairman, Sonalysts, Waterford

• HB-6350 is particularly hurtful in that we are a capital-intensive business needing to update equipment consistently to maintain global competitiveness. Eliminating tax exemptions for machinery and equipment may result in our inability to afford same, thus placing us at a competitive disadvantage with less costly states, not to mention Asia and Mexico.
  Richard H. Wheeler, ABA-PGT Inc., Manchester

• Our company is a third generation family business of 65 years and we have never known such difficult and turbulent times. T he trickle-down effect hurts everyone.  This is a time when manufacturers and other businesses need the help and support of our State Legislators. These bills will only place added burdens on us, which will cause loss of jobs or the closing of companies that cannot meet the demands set before them.
  Elizabeth LaBonia, president and CEO, Platt & LaBonia Co., North Haven

• By eliminating tax exemptions and tax credits and adding tax requirements, the Committee is absolutely asking too much of my company. In a highly competitive environment, there simply is no buffer for the additional costs contained in these bills. I implore you to consider the negative impact these bills will have on my company and its stakeholders, and reject these proposals. 
  Stephen Pretto, vice president of operations, Goldenrod Corp., Beacon Falls

• All of these bills serve to significantly increase the cost of doing business in Connecticut, and they serve as an impediment to expand and grow our operations in this state. We believe these bills will damage the entire economy of Connecticut at a time when the state should be encouraging economic growth and job creation.
  Neal J. Keating, chairman, president and CEO, Kaman Corp., Bloomfield

• As a realty company, we rely on our tenants to stay in business so they can afford to continue paying monthly rent. These proposals make it harder for my tenants to be competitive with businesses outside of Connecticut, and they will make it more difficult for our businesses to be profitable and pay their employees.  I really do not think Hartford understands the dire cond ition of our economy. Your tax plan that burdens businesses will clearly hurt Connecticut businesses and all of my tenants. 
  Thomas Costello, CFO, Siemon Realty, Watertown

• HB-6350 would negatively impact our firm because the cost of chemical processing equipment is extremely high. Losing our tax exemption would significantly affect our ability to invest in capital. As a small company, we have to watch our expenses very carefully and in this economic environment, any additional taxes will negatively affect our ability to compete globally. This is equally true of SB-815 and HB-6348. As we have repositioned ourselves in the marketplace over the last two years, we have accrued tax credits that will help us survive the current downturn. Losing those credits would cripple us going forward.
  Kate Hampford Donahue, president, Hampford Research Inc., Stratford

• Manufacturing is the backbone of our country, and your efforts should be focused on helping small businesses survive. These bills would eliminate needed exemptions to state sales tax on machinery and, if passed, would further complicate and possibly eliminate our planned investment, which should help to create jobs and stimulate the economy. Extending the sales tax to the professional services we require and use will further increase our overall operating costs.  Measures that place a moratorium on the use of corporate tax credits, and restricting the ability to use these credits at a time when they are desperately needed for survival can only have a further negative effect on our business.
  Larry J. Becker, president, Reidville Hydraulics & Mfg. Inc., Torrington

• I find it hard to believe with all of the discussion focused on stimulating our economy that these types of bills would even be considered; the impact would be detrimental to the state and our company. The bills would substantially increase our business costs and make it much harder for us to continue doing business in Connecticut.
  Paul A. Suzio, president and COO, Bridgeport Fittings, Bridgeport

• These bills would create a hardship for our member businesses and result in job losses.
  Katherine A. Fuechsel, Berlin Chamber of Commerce

• These tax bills would have a tremendously negative impact on our business. They would discourage our customers from investing in our products or even encourage them to leave the state. We do not need any more actions to discourage manufacturing in this state or this country.
  Benjamin M. Thomas, President, New England Machine Tools Inc., Bristol

• During these difficult economic times, raising taxes is not the solution. The state needs to do what every other non-government entity has done in the past six months—CUT SPENDING.  It’s pretty simple: if you folks raise taxes, we will stop hiring, lay off employees, and expand our operations outside of Connecticut.  Do the right thing. Trim the state’s expenses like every other American family has done this past year.
  Richard A. Leone, CEO, COCC Inc., Avon

 

• Without sales tax exemptions, we likely would have two fewer CNC machines and two fewer full-time employees. At a time when it is becoming more difficult to compete in the global economy (we compete with China and eastern European countries), manufacturers in Connecticut cannot afford additional tax burdens and costs specifically associated with doing business in Connecticut. Remember, this is a GLOBAL economy.
  Richard Stathers and Jeffrey Stathers, owners, True Position Manufacturing, LLC, South Windsor

The business community is voicing its opposition to raising taxes, and so have Connecticut residents. According to a recent Zogby International survey, state residents believe job creation should be legislators’ top priority for stimulating the economy, followed by cutting taxes. A strong majority also believe that business taxes are already too high or about right, and are opposed to raising taxes on businesses or individuals as a way of balancing the state budget.

“Legislators must listen to the needs of Connecticut residents and businesses and reject these job-killing bills and any other measures that would hurt Connecticut’s economy,” said Rathgeber.

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CBIA is the state’s largest business organization, with 10,000 member companies.

 

For more information contact Nancy Andrews, CBIA media relations manager, at 860-244-1957 or andrewsn@cbia.com.

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