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Connecticut sales taxes bounce back near close of fiscal year

May 24, 2019

In April for the first time since the holiday shopping season, Connecticut registered an increase in sales tax collections.

All with a potential 12-month gain still subject to June collections that in past fiscal years have been padded by midnight submissions of owed taxes.

Connecticut collected $46 million in sales and use taxes in April that nudged to $3.45 billion the state’s total for the first 10 months of the fiscal year ending in June.

Collections are now up 4 percent or $130 million for the fiscal year, after hospital taxes the second biggest year-over-year increase of any major category tracked by the Connecticut Department of Revenue Services.

In his first term in office, Gov. Ned Lamont has pushed for Connecticut to phase out exemptions that spare select industries from paying the state’s 6.35 percent sales tax, with the measure getting resistance from some quarters as the Connecticut General Assembly negotiates with Lamont’s budget office.

In December, DRS implemented a new mandate enacted by the legislature for online merchants to collect sales taxes on items they sell to Connecticut residents and businesses, after the U.S. Supreme Court ruled the previous June that states had the right to do so.

While Amazon has collected taxes for several years on sales in Connecticut, the new law added nearly 600 more online vendors that reported annual sales of at least $250,000.

After December collections rocketed up more than a third in December, then subsided three straight months through March compared to year-ago periods, resulting in a first-quarter decline that had not occurred for six years.

DRS cautioned the numbers in any single month can be impacted significantly by tax deadlines falling on weekends, with the department allowing retailers to push back submissions to later periods if they so choose.

Retail sales nationally were up 3 percent in April, according to U.S. Census Bureau estimates that will be subject to a final revision in June, with online sales and other non-store transactions surging 9 percent.

In early May, the head of leasing for Danbury Fair mall owner Macerich said his company remains emboldened about the prospects for its best malls, even after another first quarter of retail bankruptcies that included Charlotte Russe, Gymboree, and Things Remembered, and others lingering from last year like Sears Holdings.

Earlier this week, Ascena Retail Group announced the abrupt closure to come for its Dressbarn women’s clothing chain, impacting strip malls nationally.

“The first quarter had its share of store-closure announcements, but we also recognize those ... had several things in common,” said Doug Healey, Macerich executive vice president of leasing, on a conference call. “Their balance sheets were over-leveraged, preventing them from reinvesting in their brand and their business in order to keep them relevant. ... There’s no focus on customer service and ... on providing any kind of in-store experience, so as a result, these retailers became obsolete.”

Alex.Soule@scni.com; 203-842-2545; @casoulman

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