Republicans Propose Tax Relief for an Affordable Connecticut
Dear Friends and Neighbors,
House and Senate Republicans held a press conference on Thursday morning to outline our proposal for tax relief to make Connecticut more affordable for residents. Inflation is here, and relief must be too.
The Problem:
Connecticut’s state budget is benefiting from inflation as the state sales tax and gas tax brings in new, unplanned for revenue – a result of surging prices.
Meanwhile, CT residents are struggling to balance their own family budgets with no relief in sight as inflation drives up the costs of everything – from food to energy to home heating oil.
The Response:
Connecticut Republicans want to direct the influx in tax revenue back to residents and provide relief from the crushing impact of inflation.
Connecticut has a balanced budget, approved with bipartisan support. Inflation is resulting in an over taxation of CT residents. That over taxation must not be used to grow the size of Government to unsustainable levels. It must be returned to struggling families.
REDUCE INCOME TAX FOR WORKING- AND MIDDLE-CLASS
Lower the income tax rate from 5% to 4% for individuals earning less than $75,000 and joint filers earning less than $175,000 annually.
Total Tax Relief: $386.6 million
REDUCE THE SALES TAX + ELIMINATE 1% MEALS TAX
Reduce the sales tax from 6.35% to 5.99% and eliminate the additional 1% meals tax on prepared foods from grocery stores and restaurants through the end of calendar year 2022.
Total Tax Relief: $248.5 million
EXTEND GAS TAX HOLIDAY
Extend state excise tax suspension through the end of 2022.
Total Tax Relief: $180 million
EXPAND GAS TAX HOLIDAY TO DIESELS
Cut the tax on diesel by 20 cents through end of 2022
Total Tax Relief: $38.7 million
($9.7 million FY 22, $29 million FY 23)
ELIMINATE HIGHWAY USE TAX (TRUCK TAX)
Total Tax Relief: $45 million
ELIMINATE INCOME TAX ON PENSION AND ANNUITIES
Increases deduction from 56% to 100% in 2022 & beyond
Total Tax Relief: $42.9 million
INCREASE PROPERTY TAX CREDIT
Expand eligibility for the state’s property tax credit.
Total Tax Relief: $53 million
CUT NEW TAX ON JOB CREATORS
Dedicate the remaining $224.8 million in American Rescue Plan Act funds to repay the state’s Unemployment Trust Fund Loan.
Total Tax Relief: $224.8 million
VIEW THE FULL PLAN HERE
The state budget is in surplus and is already directing a record amount of excess revenue to pay down on the state’s pension debt, a policy adopted in the 2017 bipartisan budget.
In addition, Connecticut is expected to collect nearly $1 billion MORE in state sales tax and gross receipts tax revenue than originally projected in fiscal year 2022 and 2023.
This proposal uses that windfall over taxation revenue to provide $994.5 million in tax relief, as well as $224.8 million in remaining American Rescue Plan Act funds to help pay back the state’s unemployment trust fund loan. This totals more than $1.2 billion in relief.
Connecticut can deliver the proposed tax relief contained in this proposal without impacting the state budget at all. We respect all financial protections, including the spending cap, revenue cap, bonding cap, and volatility cap. We continue to contribute a record amount to the state’s budget reserve fund and invest in paying down on our pension debt.
This proposal is revenue neutral. It returns to CT residents the windfall revenue created by surging inflation with resulted in an over collection of taxes.
The growth in these revenues above and beyond the revenue already counted on in the state budget will allow for substantial relief for all Connecticut families to get through the most difficult months ahead.