Gov. Dannel P. Malloy will propose an overhaul to Connecticut’s sales tax, including lowering the overall tax rate and eliminating and adding exemptions to other levies.
The second-term Democrat will pitch the changes during his budget address on Wednesday.
The plan includes:
- Reducing the overall sales tax rate in two phases: from the current rate of 6.35 percent to 6.2 percent on Nov. 1, 2015, and then down again to 5.95 percent on April 1, 2017.
- Eliminating the exemption from the sales tax for clothing, which was scheduled to begin on July 1, 2015, but is currently not in existence.
- Eliminating other sales and business tax exemptions.
Malloy will outline full details of his proposal Wednesday, but he did say the lower sales tax rates will save consumers $70 million in FY 2016, $155 million in FY 2017, $300 million in FY 2018, $311 million in FY 2019, and $323 million in FY 2020.
However, the state will make up for that lost revenue by eliminated the sales tax exemption for clothing, which will raise $138 million and $142 in taxes in the first two years.
With the state facing billion-dollar deficits over the next few years Malloy has little wiggle room to cede budget revenue.
