State’s Future: Taxes, Taxes and More (Local) Taxes?

03.18.2010
Issues & Policies

Desperate for revenue to close budget gaps, cities and towns are pressing state lawmakers to allow them to levy more taxes beyond the local property tax. If that should happen, Connecticut would become a dizzying and costly minefield of taxes and taxing districts from region to region.

Impacted by the state’s overwhelming budget deficits, cities and towns know that they will get less help from Hartford, and already, local governments are facing the prospect of budget cuts and layoffs. Now they are advancing several proposals in the Finance, Planning and Development and Government Administration and Elections committees to boost local revenues.

One format would allow municipalities to collaborate to raise regional taxes, from a sales tax surcharge to a hotel tax and the ability to increase local fees.

More alarming is a proposal to allow towns to create six regional tax “councils” that would have the power to raise any kind of tax, including a local income tax and surcharges on property, sales or corporate taxes.

These appointed councils would be unelected and unaccountable to voters. That means consumers across Connecticut’s 169 towns and cities and eight counties could face scores of different taxes, tax jurisdictions and reporting obligations—taxes, taxes and more taxes.

Streamline instead

Because of the fiscal crisis, there was significant focus this year  on helping Connecticut’s cities and towns manage, such as by cutting back or waiving unfunded mandates placed on them by the legislature and helping them reduce costs and become more efficient.

Many local governments are already starting to work together to coordinate similar services to save costs. The legislature’s M.O.R.E. commission is also working on a broad series of recommendations to create efficiencies in what it calls “the four Rs of municipal reform: regionalism, revenue streams, relief from unfunded state mandates, and restructuring state and local government.

All of those streamlining efforts will be much more productive than opening the door to a whole new layer of taxes in Connecticut and further damaging our struggling economy.

What’s more, taxes are extremely complicated—the complexities of the sales tax, for example, are a very tangled web that would ensnarl local governments as well as consumers.

Connecticut has already lost more than 100,000 jobs. In order to regain jobs, we need to encourage business investments that lead to new jobs. Creating a much more volatile and unpredictable tax environment on the local level will only encourage investors to forget Connecticut.

Taxpayers want responsible, long-term solutions. Businesses and individuals have had to cut their budgets. So must government learn to do more with less.

For more information, contact CBIA’s Bonnie Stewart at 860.244.1925 or bonnie.stewart@cbia.com..

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