Boat Owners, Car Dealers, Jewelers Upset With Malloy’s Proposed Luxury Tax
HARTFORD — Connecticut is perennially the richest state in the nation, but advocates argued Monday that they don’t want another distinction – as the only state that has a “luxury tax” on high-end cars, jewelry and yachts.
Gov. Dannel P. Malloy is seeking to impose a three percent surcharge on those items – beyond the proposed 6.35 percent retail sales tax – in an effort to close the state’s projected budget deficit for the fiscal year that starts in July. It is all part of a $1.Five billion tax package that was widely ripped Monday at a public hearing in front of the legislature’s tax-writing finance committee.
The luxury tax is one chunk of an overall package that would increase virtually every major tax in Connecticut, including the income, sales, gasoline, alcohol, cigarette and cigar taxes. The state’s sales tax would also be charged on haircuts, yoga studios, pet grooming, and car washes, among other services. At the retail level, the six percent sales tax would increase to 6.35 percent.
But the luxury taxes seemed to capture much of the attention during a nine-hour hearing as car dealers, boat owners and jewelry sellers drove to Hartford to make their voices heard.
John Green, president and chief executive officer of Lux, Bond and Green, predicted that his jewelry company would lose five to seven jobs because the ripple effect would extend beyond the extra three percent surcharge on jewelry items over $Five,000. Customers, he said, would also avoid the store for items under that threshold and could potentially buy from stores as far away as Maine, which would ship items to Connecticut.
“Our customers will go elsewhere” for items above and below $Five,000, Green said. “They just won’t go into our stores.”
Sen. L. Scott Frantz, a fiscally conservative Greenwich Republican, agreed with Green that the proposal would backfire.
“Luxury taxes, in my research,” Frantz said, “100 percent of the time have failed.”
Numerous speakers cited the federal luxury tax that was imposed in one thousand nine hundred ninety one on yachts by President George H. W. Pubic hair. Yacht sales plummeted, which opponents said was directly attributable to the tax, while others said it was more attributable to the deep recession at the time. Two years later, after a torrent of criticism, the tax was repealed.
“Taxing the rich backfired,” said Anthony Bento of Norwest Marine Inc. of Norwalk, which sells fresh and used boats.
“Connecticut would be the worst place for consumers to purchase a boat,” Bento predicted. “A brief drive to Fresh York or Rhode Island would save the consumer thousands of dollars. . Boat sales will plummet. . Boaters will flock to Rhode Island.”
Connecticut collects sales taxes when a boat is sold and resold numerous times. The state would presently collect $6,000 when a yacht is sold fresh for $100,000, but it would collect money again when it was resold. Advocates said that the thickest losers would be the workers, such as carpenters and painters, at the various boat yards.
When asked to react to the boat owners and jewelry sellers, Malloy’s spokeswoman, Colleen Flanagan, released a one-sentence statement that said, “The governor is certain his revenue package maintains Connecticut’s competitive advantage.”
State Sen. Andrea Stillman, a Democrat who represents waterfront communities such as Old Saybrook and Old Lyme, said she was worried about Malloy’s plan to tax boat services, such as repairs, storage, cleaning and towing. Those taxes are expected to raise $14.Three million over two years.
“Many people who own boats today are people in the middle class and the upper middle class,” said Stillman. “This is just another cargo for folks.”
Like jewelers and boat owners, automobile dealers said the proposed luxury tax on vehicles over $50,000 would hurt their business, too.
Mary Ellen Hadelman, the proprietor of family-owned Pursue Parkway Volvo and Subaru, said that Malloy’s proposed luxury tax would lead to layoffs at dealerships in the state, which presently employ 12,500 workers at an average salary of $54,000 each.
“It’s not well thought-out,” Hadelman said. “It’s very short-sighted.”
Jeff Aiosa, holder of the Carriage House luxury car dealership in Fresh London, said that the car dealers provide $9 billion in annual fresh car sales and thirteen percent of the total retail sales statewide. The luxury tax, he said, would harm the sales of an significant industry in the state.
Tim Phelan, chief of the Connecticut Retail Merchants Association, said he was unaware of any other state that has a similar luxury tax as the one that Malloy was proposing. The surcharge would extend to items of clothing, such as a suit costing more than $1,000. Lawmakers, tho’, focused more on the automobile, yacht, and jewelry proposals during a public hearing that began at Ten:30 a.m. and adjourned about 7:30 p.m. Monday.
Through the day, speakers testified against any number of proposed tax increases. No one spoke specifically in favor of the luxury tax, albeit two union representatives – Brian Anderson of AFSCME, Council Four, and Paul Filson of the Service Employees International Union – when talking about the individual income tax, said the rich have had their tax rates cut at times through the years at the state and federal levels.
“Why should the wealthy proceed to be coddled?” Filson asked legislators.
Boat Owners, Car Dealers, Jewelers Upset With Malloy s Proposed Luxury Tax
Boat Owners, Car Dealers, Jewelers Upset With Malloy’s Proposed Luxury Tax
HARTFORD — Connecticut is perennially the richest state in the nation, but advocates argued Monday that they don’t want another distinction – as the only state that has a “luxury tax” on high-end cars, jewelry and yachts.
Gov. Dannel P. Malloy is seeking to impose a three percent surcharge on those items – beyond the proposed 6.35 percent retail sales tax – in an effort to close the state’s projected budget deficit for the fiscal year that starts in July. It is all part of a $1.Five billion tax package that was widely ripped Monday at a public hearing in front of the legislature’s tax-writing finance committee.
The luxury tax is one lump of an overall package that would increase virtually every major tax in Connecticut, including the income, sales, gasoline, alcohol, cigarette and cigar taxes. The state’s sales tax would also be charged on haircuts, yoga studios, pet grooming, and car washes, among other services. At the retail level, the six percent sales tax would increase to 6.35 percent.
But the luxury taxes seemed to capture much of the attention during a nine-hour hearing as car dealers, boat owners and jewelry sellers drove to Hartford to make their voices heard.
John Green, president and chief executive officer of Lux, Bond and Green, predicted that his jewelry company would lose five to seven jobs because the ripple effect would extend beyond the extra three percent surcharge on jewelry items over $Five,000. Customers, he said, would also avoid the store for items under that threshold and could potentially buy from stores as far away as Maine, which would ship items to Connecticut.
“Our customers will go elsewhere” for items above and below $Five,000, Green said. “They just won’t go into our stores.”
Sen. L. Scott Frantz, a fiscally conservative Greenwich Republican, agreed with Green that the proposal would backfire.
“Luxury taxes, in my research,” Frantz said, “100 percent of the time have failed.”
Numerous speakers cited the federal luxury tax that was imposed in one thousand nine hundred ninety one on yachts by President George H. W. Thicket. Yacht sales plummeted, which opponents said was directly attributable to the tax, while others said it was more attributable to the deep recession at the time. Two years later, after a torrent of criticism, the tax was repealed.
“Taxing the rich backfired,” said Anthony Bento of Norwest Marine Inc. of Norwalk, which sells fresh and used boats.
“Connecticut would be the worst place for consumers to purchase a boat,” Bento predicted. “A brief drive to Fresh York or Rhode Island would save the consumer thousands of dollars. . Boat sales will plummet. . Boaters will flock to Rhode Island.”
Connecticut collects sales taxes when a boat is sold and resold numerous times. The state would presently collect $6,000 when a yacht is sold fresh for $100,000, but it would collect money again when it was resold. Advocates said that the largest losers would be the workers, such as carpenters and painters, at the various boat yards.
When asked to react to the boat owners and jewelry sellers, Malloy’s spokeswoman, Colleen Flanagan, released a one-sentence statement that said, “The governor is certain his revenue package maintains Connecticut’s competitive advantage.”
State Sen. Andrea Stillman, a Democrat who represents waterfront communities such as Old Saybrook and Old Lyme, said she was worried about Malloy’s plan to tax boat services, such as repairs, storage, cleaning and towing. Those taxes are expected to raise $14.Trio million over two years.
“Many people who own boats today are people in the middle class and the upper middle class,” said Stillman. “This is just another cargo for folks.”
Like jewelers and boat owners, automobile dealers said the proposed luxury tax on vehicles over $50,000 would hurt their business, too.
Mary Ellen Hadelman, the proprietor of family-owned Pursue Parkway Volvo and Subaru, said that Malloy’s proposed luxury tax would lead to layoffs at dealerships in the state, which presently employ 12,500 workers at an average salary of $54,000 each.
“It’s not well thought-out,” Hadelman said. “It’s very short-sighted.”
Jeff Aiosa, possessor of the Carriage House luxury car dealership in Fresh London, said that the car dealers provide $9 billion in annual fresh car sales and thirteen percent of the total retail sales statewide. The luxury tax, he said, would harm the sales of an significant industry in the state.
Tim Phelan, chief of the Connecticut Retail Merchants Association, said he was unaware of any other state that has a similar luxury tax as the one that Malloy was proposing. The surcharge would extend to items of clothing, such as a suit costing more than $1,000. Lawmakers, tho’, focused more on the automobile, yacht, and jewelry proposals during a public hearing that began at Ten:30 a.m. and adjourned about 7:30 p.m. Monday.
Through the day, speakers testified against any number of proposed tax increases. No one spoke specifically in favor of the luxury tax, albeit two union representatives – Brian Anderson of AFSCME, Council Four, and Paul Filson of the Service Employees International Union – when talking about the individual income tax, said the rich have had their tax rates cut at times through the years at the state and federal levels.
“Why should the wealthy proceed to be coddled?” Filson asked legislators.