Connecticut Gov. Ned Lamont’s budget for the fiscal 2020-2021 recommends tax changes that include:
– expanding the sales tax base;
– eliminating the business entity tax;
– making the 10% corporate business tax surcharge permanent;
– creating a 75% wholesale tax on electronic cigarette liquids;
– establishing bottle deposit and plastic bag fees; and
– restoring the property tax credit to all personal income taxpayers.
The governor’s budget contains no rate increase for personal income taxpayers. Connecticut raised income tax rates 5 times over a 15-year period. This represents a rate increase of 55% since 1991.
He wants to fully restore the property tax credit. The previous budget limited the credit to seniors and taxpayers with dependents for the 2017 and 2018 tax years.
This budget does not increase the general sales tax rate. It proposes a broad expansion of the sales tax on:
– all purchases for final consumption by households; and
– goods and services.
A few exceptions will apply to basic needs including food, prescription drugs, health, and education services. The sales tax expansion will not include business-to-business transactions.
Other Business Tax Proposals
Lamont proposes to cap all corporate business tax credits at 50.01% of tax liability. The 50.01% cap applies to most credits on current law, except:
– research and development credits; and
– urban and industrial site reinvestment credits.
2020-2021 Biennial Budget Address, Connecticut Gov. Ned Lamont, February 20, 2019; 2020-2021 Biennial Budget, Connecticut Office of Policy and Management, February 20, 2019