HARTFORD, CT — In lieu of a broad based increase in the sales tax, Democratic legislative leaders were working on finalizing a budget Wednesday that will include a monthly tax on cellphone bills and certain real estate transactions.
The situation regarding what revenues will be included in the package was so fluid that the Finance, Revenue, and Bonding Committee postponed a vote on the revenue package until 11 a.m. today.
The cellphone tax, which was first reported by CTNewsJunkie, was raised late Tuesday as a way to make up for the revenue lost through the elimination of a sales tax increase. And lobbyists for the wireless phone industry were working hard to kill it.
According to the FCC there are 3.6 million cellular subscribers in Connecticut. That number doesn’t include government and prepaid customers.
The amount of revenue the tax could generate at $1 per line, per month is around $43.2 million.
Connecticut residents already pay 6.35 percent in sales taxes on their wireless service and a 58-cent-per-month fee to pay for the 9-1-1 emergency system. Currently, Connecticut consumers pay about 14 percent of their bill in federal and state wireless taxes and fees. If the $1-per-month, per-plan proposal is enacted, that tax would jump to 16.5 percent.
Another tax that seems to have new life is the real estate conveyance tax.
Last week, when Gov. Dannel P. Malloy proposed his compromise budget he suggested increasing the tax on home sales. The tax on homes valued at $800,000 would increase from 1.25 percent to 2 percent and homes valued at under that amount would increase from 0.75 percent to 1 percent. The median home price in Connecticut is $250,000.
The CT Realtors Association, which lobbied lawmakers hard this year, said home prices have not recovered over the past 10 years and many homes have lost value.
“Our Connecticut property owners should not be asked to bail out the state with money they may not even have,” Michael Barbaro, president of CT Realtors, said.
Senate President Martin Looney, D-New Haven, said earlier this week that increasing the real estate conveyance tax on properties valued at over $800,000 was “more progressive” than a broad based sales tax increase.
However, many lawmakers expressed concern about an increase in the tax at a time Connecticut is losing population.
“Real estate needs to recover if we are ever going to return to a stable economy in Connecticut,“ Barbaro said. “These regressive taxes are bad for property owners, bad for business and bad for Connecticut.”
Democrats need 76 votes in the House and 18 votes in the Senate to pass what’s expected to be one large budget package that includes all the implementation language.
As of Wednesday night, legislative leaders still expected a vote to happen today.