Tax Proposal Weakens Confidence, Economy

CBIA testified before the Finance Committee this week against a proposal that would weaken business confidence in the state by extending three tax increases set to expire on June 30.

Among other things,SB 843 extends a 20% surcharge on the corporation business tax, a tax on certain generators of electricity, and a reduction in the credit limit for the insurance premium tax.

While employers know that there are no guarantees in state tax policy, they do look for a reasonable assurance that the rules won’t constantly change. In fact, two hallmarks of a competitive state tax structure—predictability and consistency—help businesses make the long-term investment decisions that enable the economy to grow.

Tax policy in Connecticut, however, has not been particularly consistent or predictable over the years, and passage of SB 843 would continue the trend.

On the other hand, businesses were encouraged that the governor’s budget proposal does not rely heavily on tax increases, especially after the very large increases passed in 2011. It also avoids other problematic business tax changes that had been considered in recent years.

The best way to deal with the state’s fiscal problems is by allowing our economy to grow. Consistency, clarity, and fairness in state tax policy will help unlock the business investment and job creation we need.

CBIA encourages the Finance Committee to reject the proposal to continue the corporate surcharge, electric generation tax, and reduced credit limit for the insurance premium tax. Lawmakers should find additional spending reductions and pass a new two-year budget with no tax increases.

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