A human services coalition is urging state lawmakers to eliminate all sales tax exemptions except those on food, a change it claims could generate $2.5 billion in additional revenue.
The pitch comes as nonprofits await the outcome of the ongoing legislative session, which could result in millions of dollars in cuts in the upcoming fiscal year and has already seen cuts in the current fiscal year.
Roger Senserrich, policy director for the Connecticut Association for Human Services, said in the association’s e-newsletter this week that Connecticut´s tax code has a “monumental amount” of carve outs, exemptions, loopholes and special provisions that leave a large percentage of the state’s economy untaxed.
“In general, we prefer to have a lower overall tax at a lower overall rate than to start exempting things; there needs to be a very strong rationale to keep something exempt,” Senserrich said.
CAHS, citing figures from the General Assembly’s Office of Fiscal Analysis, said the state currently collects approximately $4 billion in annual sales tax revenues. “It is a fairly regressive tax, with families at the bottom of the income distribution paying much higher effective rates than anyone else,” Senserrich said.
CAHS said eliminating the exemptions could also lead to lowering the overall sales tax rate, which would be a positive step for low-income families. “Broadening and simplifying the sales tax makes sense,” he added.
