Lamont: expand the sales-tax base, but not rate
BRIDGEPORT — Gov. Ned Lamont’s budget proposal next week will include an expansion of sales taxes on services and Internet sales that are either exempt or have been tough to extract revenue as more bricks-and-mortar stores are losing out to online commerce.
Hundreds of millions of dollars would be collected if the legislature agrees to end exemptions, he said after the opening ceremony for a community market in the city’s East End.
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“I’m going to welcome the legislature,” Lamont said in the middle of usually busy Stratford Avenue, closed for the morning to celebrate a $250,000 grant from CVS and Aetna for the opening of a neighborhood market.. “Look, they’re a co-equal branch of government. The way I would do it, is I would hold the line on the sales tax and expand the base.”
Lamont said that the digital economy and online sales are taking more and more consumer dollars.
“It’s fundamentally unfair that merchants on a street like this have to collect sales taxes while the big Internet retailers didn’t until recently,” Lamont said. “I’d say the same thing for digital downloads and the such. And I’m also thinking about the service economy and the ways, maybe, that they should participate. And if the legislature doesn’t like it, I’d say come up with your own line. Maybe you can do something with the rates. But I want to hold the line on the sales tax.”
A new law that took effect on December 1 requires large-scale, third-party such as eBay and Etsy, with more than $250,000 in annual sales and in excess of 200 transaction, to begin collecting the 6.35-percent sales tax and paying the state. Amazon has been giving sales taxes to the state since 2013. Lamont said he never intended to expand the ales tax to groceries, as reported by some media outlets in recent days.
Lamont, whose first budget address will be on Feb. 20, said his administration has been talking “very collaboratively” with state-employee unions as well as the teacher unions, whose massively under-funded pension program faces a $2-billion to $3-billion fiscal cliff within Lamont’s four-year term.
“The costs could be unsupportable over the next three or four years and we’re negotiating to see how we can stretch out that obligation and reduce our annual costs, and save the pension,” Lamont said, stressing his recent announcement to cut the annual capital budget and reduce long-term borrowing by cutting the annual $1.6-billion in bond obligations, by about $600 million a year.
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