Sales Tax Proposal Pits Municipalities Against Nonprofits

by Jack Kramer | Apr 25, 2017

HARTFORD, CT — The state’s largest organization of local leaders came out in support of a plan Wednesday to raise the state’s sales tax rate from 6.35 percent to 6.99 percent as long as the increased hundreds of millions generated would be sent back to the municipalities.

The Connecticut Conference of Municipalities says the increase in the sales tax rate could provide an estimated $440 million to towns and cities, but only if the state doesn’t take a cut of the proceeds in the process.

CCM Executive Director Joe DeLong said the organization supports the tax hike to boost revenue and reduce dependence on a regressive property tax system.

However, the group’s support is “contingent on other important cost-control measures being adopted by the General Assembly,” DeLong said.

“We need to have cost containment” along with a sales tax increase to prevent the additional money coming in “being spent like we’re drunken sailors,” he added.

Betsy Gara, executive director of the Council of Small Towns, said her organization supports the legislation because “property taxpayers have had a bullseye on their backs” for too long and increasing the sales tax is “a fairer plan.”

Nonprofit organizations are opposing the bill because it also includes language to eliminate the sales tax exemption on goods and services provided by nonprofit organizations. This part of the legislation would cost nonprofits about $216 million a year.

Peter DeBiasi, chairman of the board of the CT Community Nonprofit Alliance, said the proposal would “would take funds from services for people with developmental disabilities and homeless shelters, from people struggling with substance abuse, victims of domestic violence, and arts and cultural programs, among other services.”

He said nonprofits have been exempted from the sales tax because “they provide services in their communities so that government does not have to.”

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