Members of the business community traveled to the state Capitol on Thursday to let lawmakers know they’re concerned about the harm the Democratic tax package, especially the broadening of the sales and use tax, will have on their companies.
Chris DiPentima, president of Pegasus Manufacturing, said his company, which supplies the aerospace industry, continues to feel cost pressures from their customers.
“If we’re the most expensive store on the block no ones going to buy our product,” DiPentima said. “We can’t pass cost increases onto our customers, we have to somehow absorb them.”
Mary Manfredi, finance director of Computer Sciences Corporation, said her company is a global company that’s been happy to call Connecticut home since 1991. However, Manfredi said the expansion of the sales tax to a variety of services “is going to hurt our competitiveness, going to hurt our clients, and going to hurt our employees.”
Joe Brennan, president and CEO of the Connecticut Business and Industry Association, said one of the advantages Connecticut has over other states is the structure of its corporate income tax. But he said the Democratic tax package limits the effectiveness of the tax credits companies can use to lower their tax liability and it broadens the sales tax base on many business-to-business services.
“I can’t state strongly enough how important it is for the state to go back, find other areas where they can cut the budget, and not do things that are going to harm our ability to create jobs and retain jobs in Connecticut,” Brennan said.
Budget negotiations are expected to continue behind closed-doors Thursday. What little information has leaked out about the discussions has caused rank-and-file lawmakers and lobbyists to fear for the worst.
“There’s nothing this General Assembly can do to please CBIA 100 percent,” Rep. Jeffrey Berger, D-Waterbury, said Thursday.
Berger, who as co-chair of the Finance Committee was at the Capitol until 4 a.m. in budget negotiations, said “they become the ultimate naysayers of any kind of progress that we would like to do.”
He said statements about what is or isn’t in the revenue package are “disrespectful to the process,” which is taking place behind closed-doors with Gov. Dannel P. Malloy.
Berger said Malloy participated in budget negotiations until 3 a.m. Thursday. He said he thinks the two sides are close and ideally would like to pass a budget this weekend, but it could all hinge on what happens Thursday afternoon when the two sides meet again.
He wouldn’t say what, if any, taxes may be taken out of the Democratic tax package, but he said the tax restructuring in S.B. 1 has to be part of the budget package. He said giving a portion of the sales and use tax back to municipalities is “an integral part of the budget.”
The S.B. 1, which is Senate President Martin Looney’s top priority, creates a municipal revenue sharing account and deposits a portion of the sales tax there, and then creates a calculation to distribute it to municipalities and regional councils of government.
But, according to sources, Malloy may have had other plans for that additional sales tax revenue.
Sources said Thursday that Malloy may be looking to use some of the additional revenue from the expanded sales tax to fund his 30-year, $100 billion transportation proposal.
Malloy’s office declined to comment specifically on negotiations, but Malloy administration spokesman Mark Bergman said, “As we negotiate a final budget and revenue package, the Governor’s priorities — which include transportation as well as the legislature’s priorities — remain integral parts of the on-going conversations.”
Berger said he thinks the fact that the state will be giving some money back to the municipalities as part of the tax increase is lost in the discussion. CBIA disagrees.
Brennan said they’ve done the math and it’s not a wash for businesses. He said when the municipalities get the money from the state there’s no guarantee they will lower taxes and there’s absolutely no guarantee they will lower the taxes of a specific business by the same amount that business is losing to the expanded sales tax.