The legislature’s Finance Committee threw cold water Friday on Gov. Dannel P. Malloy’s “middle-class tax relief” package when it restored the municipal motor vehicle tax and erased his attempt to restore the sales tax exemption on clothing and footwear.
The tax breaks were offered up to the public at-large who would benefit from not having to pay taxes on clothing and footwear on purchases up to $25 in the first year, and $50 in the second year of the budget. More than 90 percent of the driving public would have seen their motor vehicle taxes eliminated under Malloy’s proposal.
But lawmakers had other plans.
The move to erase Malloy’s car tax proposal was not unexpected since it was widely panned by municipal leaders.
Malloy’s budget called for eliminating the tax on motor vehicles valued at $28,500 or less. The Office of Fiscal Analysis has estimated that the proposal would leave cities and towns to lose $632.8 million in revenue.
The proposal the Finance Committee approved 31-17 Friday on motor vehicles assessed at $20,000 will push that proposal out to 2018, while policymakers figure out how to replace the revenue municipalities receive from the tax.
A commission created by House Speaker Brendan Sharkey is also looking at the motor vehicle tax proposal.
Sharkey said it’s possible the commission will come up with something before 2018.
“I personally think we need to include in any discussion of the car tax a state reimbursement of some degree,” Sharkey said.
Municipal leaders were concerned about how Malloy implemented the tax because it eliminated one of their revenue sources without replacing it with a state grant of any sort. Sharkey is in favor of phasing out the tax.
The move was applauded by municipal leaders, who largely included the revenue from the car tax in their own budget proposals presuming that lawmakers would restore it.