HARTFORD, CT — Gov. Dannel P. Malloy has said he wouldn’t lead with tax increases, but his budget changes tax credits and exemptions by $205.1 million in 2018 and $166.6 million in 2019.
The largest tax increase is the elimination of the $200 property tax credit for middle-income earners. Malloy is also proposing a 45-cent increase in the cigarette tax to $4.35 per pack.
The state will also lower the Earned Income Tax Credit from 27.5 percent to 25 percent of the federal refund to low-income families. The reduction will allow the state to hold onto $25 million more a year.
Malloy is also trying again to lower the price of alcohol.
Currently, the lowest price a package store can charge for a bottle of alcohol is a set price known as the “bottle price.” It’s established by wholesalers and posted monthly. Retailers can’t sell their liquor for less than that price.
The governor believes the fixed minimum price results in Connecticut consumers paying more than they would in another state. Malloy wants to let retailers set the price, so long as they sell booze for at least the price they purchased it at.
The proposal has been shot down by legislators since 2012 when Malloy first proposed it.
All three of those proposals are expected to raise $195.7 million in 2018 and $190.1 million in 2019.
Other smaller proposals include certain fee changes like increasing the nickel deposit on carbonated beverage bottles to 10 cents.
Malloy’s proposal also makes changes to the Estate Tax, which is often characterized as uncompetitive and also as one of the things motivating some of Connecticut’s wealthiest citizens to leave the state. Malloy’s proposal would phase-in an increase in the Estate Tax exemption from its current $2 million level to the federal level of more than $5 million over three years.
Malloy also assumes that tax collections will increase by about $60 million in 2018 and $25 million in 2019.
House Minority Leader Themis Klarides, R-Derby, said she won’t support any revenue increases.
“I think balancing a budget on the backs of the middle class is no vision for the state of Connecticut,” Klarides said.
Senate President Martin Looney, D-New Haven, who worked for more than a decade to get Connecticut to adopt an Earned Income Tax Credit, said he thinks there are other ways that “we can address some of these challenges.”
Looney said he doesn’t support elimination of the property tax credit.
“It’s important middle class tax relief,” Looney said. “It’s something that supports 874,000 families in Connecticut.”
Senate Republican President Len Fasano, R-North Haven, said Malloy’s budget includes “over $200 million in annual tax increases on low and middle income families, over $400 million in new property tax burdens, potentially 4,200 state employee layoffs, and $570 million in expenses pushed onto our children’s credit card thanks to the governor’s pension deal. I don’t see this budget creating stability. I see it creating chaos.”