Malloy Proposes Tax Hike Rollbacks
Connecticut Governor Dannel Malloy today proposed rolling back about a third of the business tax hikes included in the $40 billion, two-year state budget passed by the General Assembly on June 3.
Malloy told a news conference at the State Capitol he anticipates lawmakers will consider the changes when the House and Senate meet in a special legislative session later this month.
His proposal removes $223.7 million of the $700 million in tax hikes that targeted businesses.
The budget’s narrow passage in both chambers of the legislature prompted widespread outcry, with a number of large companies publicly questioning whether they could remain in Connecticut.
CBIA president and CEO Joe Brennan, who met with the Governor shortly before he announced the proposed tax roll backs, said the changes would mitigate the budget’s damaging economic consequences.
“This is a welcome shift in the budget debate,” Brennan said today. “The lack of spending control and the tax increases proposed in the approved budget would cause serious, long-term damage to the economy and the state’s ability to keep good paying jobs here.
“By adopting the changes proposed by the Governor, the General Assembly can mitigate the damage and can show that it too has listened to the concerns of the men and women across our state who create jobs.”
To offset the tax roll backs, the Governor said he will give the legislature the option to either cut 1.5% in spending from any line item, or grant him the authority to make the cuts.
The Governor proposed canceling or delaying some of the most controversial taxes included in the new budget, including:
- Repealing the one to 3% hike in the sales tax rate on data processing and other online services.
- Lowering the annual cap on tax credits from 70 to 55 percent. The budget calls for the cap to drop to 50 percent.
- Delaying the unitary reporting requirement within the corporation tax until January 1, 2016. It was supposed to be retroactive to the start of this year.
Malloy also said he was open to discussion about changing the budget’s treatment of the net loss carryforward (NOL), which helps vulnerable start-up companies gain a foothold.
The approved budget reduces NOLs to 50% of net income in any year; a $246 million tax increase.
“We’re encouraged by the Governor’s remarks that we may have further discussions regarding the NOL provisions in the corporate tax, another tax matter that is of serious concern for many employers across the state,” Brennan said.
“We look forward to the opportunity to work with the Governor and the legislature to ensure that the final state budget, after the special session, is one that encourages employers to locate good jobs here rather than in the other states that would so desperately like to call their own.”
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