April 15, 2019
OTHER VOICES

New taxes spell danger for CT retailers

Tim Phelan

Once again, Connecticut is at a fork in the road.

With less than two months remaining in the legislative session, decisions will soon be made on an array of tax increases actively being considered. There are clear and predictable dangers ahead, with prospects for Connecticut's retail industry — and our customers — very much at risk.

Connecticut retailers support more than 470,000 jobs and contribute more than $34 billion to the state's economy. There are roughly 42,000 retail establishments in Connecticut, and in total, the retail industry produces approximately 14 percent of Connecticut's total GDP.

As much as any other industry, retail is the lifeblood of commerce in Connecticut, indispensable to our economy and quality of life. Retail businesses large and small provide good jobs for Connecticut families, and more than 98 percent of all retail companies are small businesses, employing fewer than 50 people.

For some, retail is a first job and a foothold into our economy; many others turn to retail because of the many fulfilling and rewarding career paths the industry offers.

Retail businesses need to balance a budget, work diligently to sustain good jobs in a turbulent economy, and meet the challenges of increasing competition, not only from brick-and-mortar competitors but an ever-growing number of online options.

We recognize that Connecticut is facing serious fiscal challenges, and difficult decisions must be made. Our legislators are working diligently to steer Connecticut through, when options are limited and there are no easy choices. In fact, no one appreciates this more than retailers, because our customers are always top of mind. What impacts them impacts us.

All of which makes the list of sales tax and other potential changes of great concern. Any one of them may not be disastrous — but as they keep piling on, one after another, it will become a case of death by a thousand cuts, which will hurt individual retailers and the retail industry, and hurt consumers and our communities.

The list is virtually endless, and the ramifications are substantial. Extending the sales tax to dry-cleaning services. Imposing a fee on plastic bags. Instituting a sugar tax on beverages. Increasing the minimum wage. Adding tolls to our roadways. Eliminating the sales tax free week. Instituting a tax on accountant, legal and a multitude of other services that retailers depend on in the course of their business activities.

At every turn retailers will need to pay more. It is a house of mirrors — everywhere we look, we see a new tax or a new fee. Our customers will as well. All of this would increase the cost of doing business, just as it seemed we might be turning the corner on a slow-to-recover economy. Anyone who knows a retail owner in your local community realizes how challenging doing business here is already.

Retailers have always understood that we need to do our fair share, and we have. During the past decade, the sales tax has been increased, luxury tax instituted, clothing exemption reduced and then eliminated, and sales-tax holiday diminished. All of these steps have been taken to bring in money to the state, but the retail industry has felt the impact.

Retailers here already pay high corporate taxes, are routinely among the highest property taxpayers in the town they operate in, and face high fixed costs, such as rent, energy — which is the highest in the nation — increasing minimum wages, workers compensation, and healthcare costs.

Let's not pile on more inflexible requirements until we add the straw that breaks the camel's back, and see jobs and retailers flee our state in increasing numbers.

Retailer businesses and our customers have a common interest. The state should not make it tougher to make ends meet — in the family budget or the retail bottom line. We would much rather work with policymakers to strengthen Connecticut's economy and business climate, so that retailers — and the thousands of people who work or shop with us — can truly thrive.

Tim Phelan is president of the Connecticut Retail Merchants Association.

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