Gov. Malloy Proposes Overhauling the Sales Tax and Reducing the Rate to Its Lowest Point Since 1971

Press Release

Governor Dannel P. Malloy today announced that the biennial budget that he will unveil on Wednesday includes a plan to lower the sales tax to 5.95 percent -- the lowest level the state has seen since 1971 -- by reforming the sales tax and eliminating certain exemptions.

Under the plan, which is designed to support the middle class, the sales tax will be reduced in two phases: from the current rate of 6.35 percent to 6.2 percent on November 1, 2015, and then down again to 5.95 percent on April 1, 2017.

Eliminating minor exemptions will allow the entire sales tax to drop for almost all items, saving residents money on almost all purchases. The proposal would eliminate the exemption from the sales tax for clothing -- which was scheduled to begin on July 1, 2015, but is currently not in existence -- however during the annual "Sales Tax Free Week" in August, no sales tax would be owed for clothing costing less than $100. The lower sales tax rates will save consumers $70 million in FY 2016, $155 million in FY 2017, $300 million in FY 2018, $311 million in FY 2019, and $323 million in FY 2020.

"My goal is to support, stand with, and expand Connecticut's middle class. By reforming our tax system, we'll be able to lower the cost of almost all items -- for everyone," Governor Malloy said. "Our economy continues to improve, and the state is seeing the largest private-sector job growth since 1998. By streamlining and simplifying our sales tax structure, we can give working families the lowest sales tax level in four decades."

Presently, the sales tax is 6.35 percent. It was 6 percent from 1991 to 2011, between 7 and 8 percent from 1976 to 1991, and 6 percent in 1975.

Governor Malloy is scheduled to present his biennial budget proposal to a joint session of the General Assembly at noon on Wednesday.

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