Gov. Dannel P. Malloy called for lowering the state sales tax and scrapping certain exemptions during a Sunday morning television appearance. According to a spokesman, the change will boost revenues by $68 million next year.
During an interview on WFSB’s “Face the State,” Malloy said the budget proposal he unveils next week will include a two-step cut in the state sales tax. If approved by the legislature, the tax will drop from 6.35 percent to 6.2 percent in November. The rate would decrease to 5.95 the following year.
The sales tax “will be the lowest it’s been since 1971,” Malloy told Dennis House, the show’s host. “I think it’s a way to give some relief to the middle class, as the economy is improving. I’m proud to present this as a proposal to the legislature. My budget will assume this is happening.”
The budget Malloy presents Wednesday must close deep deficits in the next two years. The state is projected to be $1.3 billion in deficit in 2016 and $1.4 billion in 2017.
Malloy said he would “do away with some exemptions” to the sales tax to pay for the cut to the overall rate. He didn’t specify which exemptions he would eliminate, but said some would be “on the corporate tax side.” He also mentioned an exemption that applies to most clothes.
“Quite frankly, we’ll have more relief for the middle class than simply saying clothing’s not going to be taxed. The reality is a family of four buys a lot of things other than clothing that they’d be a paying a higher sales tax on,” he said.
According to Malloy’s office, the change will increase revenue by $68 million next year but decrease it by $12 million the year after. The administration estimates the change will save consumers $70 million in the first year and $155 million in 2017.
Malloy said the budget will preserve a “luxury tax” on expensive products like certain jewelry and cars that cost more than $50,000.
The governor is expected to provide more details on the policy at an event in Middletown Monday.