Friday, the largest tax increase in Connecticut’s history will begin going into effect.
Beginning July 1, the statewide sales tax will go from 6-percent to 6.35-percent and most sales tax exemptions (clothing and shoes, yoga and day spa needs, pet services and grooming, yarns and fabrics, valet parking, etc.) will phase out.
Additionally, items deemed as “luxury” products—boats over $100,000, cars over $50,000, jewelry over $7,000, and individual purchases costing $1,000 or more for clothing, footwear, handbags, luggage, umbrellas, watches or wallets—will be taxed at the significantly higher rate of 7-percent.
Hotel and car-rental taxes will go up too, from 12 to 15-percent and 6 to 9.35-percent respectively.
When sales taxes go up, everyone in the state suffers. Consumers obviously suffer because they are forced to pay more for the products and services they purchase. The stores suffer because they lose business when demand reduces and consumers seek cheaper options or simply forgo certain purchases. And the overall economy takes a hit as the cost-of-living increases and the largest component of GDP growth – consumer spending – is depressed.
Businesses know this will chase consumers from their stores. Shop-owners are worried that their customers will either go to other states to purchase their goods or services (not hard to do in that region), or they will simply cut back spending.
Some stores are using discounts or sales to attract customers in advance of the higher levy’s implementation. One yoga instructor, Justine Fuller of Hartford, is having a “Keep your Money from Uncle Sam Sale,” offering 10-percent off if you buy classes for over six months. Porsche of Fairfield is offering a 7.35-percent discount on new cars before the tax increase.
Other companies are simply using marketing tools to alert their customers about the tax increases. Source Clothing Co., of Cheshire, has been updating their Facebook and Twitter accounts with a daily countdown till the tax takes effect. They end every Twitter update with “Thanks @govmalloyoffice.”
Midge Becker, the owner of Best Dressed Kids, a children’s consignment store in Bloomfield, says: “I'm appalled…The people who shop in stores like mine do so because they need to save wherever they can. To put more of a tax burden on them is ridiculous.
Connecticut residents already have the dubious distinction of having the costliest state government in the nation. Unfortunatly, on Friday it’s going to get a little worse. I would suggest grabbing a drink to forget about it but on Friday the alcohol tax will skyrocket by 20-percent.
WE WANT TO HEAR FROM YOU: Would you buy something in the next few days before the tax increase takes effect? If so, what would you purchase?