The Finance, Revenue, and Bonding Committee voted Thursday 29-21 in favor of extending the real estate conveyance tax for two more years.
Sen. Andrew Roraback, R-Goshen, said the tax implemented five years ago is unfair to both homeowners looking to sell their homes and municipalities. He said he thinks the state is in a position to absorb at least some of the conveyance tax.
Sen. Eileen Daily, D-Westbrook, who chairs the committee said, she doesn’t believe the state is in position to give up any tax revenues.
“I don’t think we can do that at this time,” she said. Roraback countered by asking, “When is this conversation ever going to come to an end.”
Rep. Craig Miner, R-Litchfield, asked at what point the state is going to go back and look at the reasons why it created this tax in the first place.
The tax was created in 2003 to balance the budget without lowering aid to cities and towns, which collect the revenues from the coveyance tax. It brings in about $40 million a year.
The Connecticut Conference of Municipalities has been a strong proponent of making the tax permanent, while realtors have opposed it. Just yesterday hundreds of realtors marched from Bushnell Park to the Capitol to tell lawmakers they should sunset the tax.
The real estate conveyance tax was supposed to sunset the year after it was passed, but lawmakers continued to extend it.
Realtors say it’s a regressive, hidden sales tax that ambushes home and commercial property sellers. They say on average it takes about $2,500 out of a seller’s pocket at closing.
Ken DelVecchio, President of the Connecticut Association of Realtors, said he wanted to know “In these difficult economic times, with home sales slowing, how can legislators dismiss the needs of families across the state, who are struggling to make ends meet?”
“We continue to hear from municipal officials that they cannot get by without the extra revenue. But the tax increases were meant to be temporary and it is past time to give home owners of Connecticut a break,” DelVecchio said.
Local municipal leaders have supported the tax because it reduces their need to increase property taxes or cut local services.
Rep. Cameron Staples, D-New Haven, the other co-chair of the committee, said leadership is looking at ways to exempt homeowners who may be in a negative cash flow situation at closing. “We’re trying to come up with an appropriate amendment,” Staples said.