The mayors of four of Connecticut’s largest cities testified last week that they want to raise sales taxes within their borders to cope with city budget shortfalls.
Apparently, this is not an early April Fool’s Day joke.
They’re serious. And they’re not fazed by the overwhelming public opposition or the plan’s obvious economic flaws.
At the very least, sales tax rates should be less, not more, than the rates collected in the surrounding suburbs. It would make sense to earmark the difference for the cash-strapped cities to help them cope with the fact that they tend to attract poorer citizens with costly needs.
Instead, the mayors of New Haven, Bridgeport, Stamford and New London are seeking legislative authority to boost their sales tax rates to 7 percent while the statewide rate remains set at 6 percent. That might give them a net short-term revenue bump (or not), but it’s a potentially disastrous long-term strategy.
It would only add to the list of reasons shoppers have to avoid going downtown – like parking costs and fear of crime.
The proposal is bewildering because it will certainly drive out existing and would-be retailers from the state’s cities. What sensible retailer would choose to locate a new business in a special high-tax area that their customers shun?
So why would the mayors go out of their way to encourage consumers to leave their cities for the suburbs where retail goods cost less or to just go online to shop?
Consider the car dealership that collects heavy sales taxes from every customer. The current sales tax on a new $30,000 car amounts to $1,800. The four mayors want the cities’ dealers to collect an extra $300. That creates an instant competitive disadvantage for the dealers, who battle for price-sensitive customers with rivals just outside city limits.
The four mayors are just being dumb. Fortunately, Hartford’s mayor hasn’t signed on. And, fortunately, the plan may have a tough time clearing the legislative hurdle.
Maybe debate on the issue will spur more practical solutions to the problem, which is real.
Most Connecticut mayors do face immediate and serious budget challenges. The economic downturn is taking a toll on their revenues. They have made commitments to spend based on revenue levels that they may never achieve.
In the past, their answer has been to raise city property taxes. But that reliable, push-button “solution” is tired and worn-out. City property tax payers are already overburdened, especially in Hartford, the only city in the state that charges businesses a 15 percent surcharge.
Wouldn’t it be great if our government leaders exerted as much effort finding ways to cut spending as they are exerting in their legislative battle to obtain new authority to tax?
If they are short on ideas on where the cutting should begin, one outraged blogger from the Hartford Courant Forum has a suggestion:
“Let’s start making improvements by laying off the four big city mayors proposing this. A big savings in money and zero loss of intelligence.”
