Advocacy Group Asks Lawmakers To Consider Raising Revenue To Balance Budget

Lawmakers and Gov. Dannel P. Malloy avoided increasing taxes last year when resolving a nearly $1 billion budget deficit, however, at least one advocacy group is asking them to reconsider a “cuts-only approach,” as they prepare to tackle a much larger budget deficit.

Connecticut Voices for Children is recommending that lawmakers broaden the sales tax base, reform the income and corporate tax structure, levy a tax on sugary beverages and institute a fee on corporations who don’t pay their employees a living wage. The group outlined $3 billion in tax increases in a new report.

“A cuts-only {approach} may offer a short-term solution to the budget deficit, but does so at a significant cost to the long-term economic and social structure of the state,” Derek Thomas, a fiscal policy fellow at Connecticut Voices for Children, said in the report. “There are opportunities to invest in Connecticut’s future by modernizing an outdated sales tax system, strengthening taxes on corporations, and reforming wealth and income taxes.”

The report outlines three challenges with the current tax structure.

It found that income tax collections on corporate profits in Connecticut have dropped from 13.2 percent of general fund revenue in 1991 to less than 4 percent of the overall tax collections in 2015, mainly due to the growth of tax credits or avoidance. Sales tax revenue also decreased from nearly one-third of total general fund revenue to 25.2 percent. The report argues it’s because the sales tax has failed to keep up to date with the economy in which people consume more services than goods.

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