As opposition to tax package grows, so does pressure on legislators
Surrounded by jewelers and their lobbyist, Senate President Pro Tempore Donald E. Williams Jr., D-Brooklyn, patiently listened to complaints about a proposed new luxury tax. He nodded sympathetically. Then he shook his head.
No, Williams said, he is not interested in revising the tax package that was approved last week by the Finance, Revenue and Bonding Committee and is speeding to a vote by the full Senate no later than Tuesday.
“We have an agreement with the governor,” Williams said. End of story.
Variations of that scene played out Wednesday all over the State Capitol. Jewelers, car dealers and others affected by the tax package buttonholed lawmakers in the Capitol’s halls, pleading their case. Some came with lobbyists, others without.
Scenes like those are why Williams committed to a quick vote on the budget deal. Once reported out of committee, tax and spending plans get picked apart, drawing opposition the way a dead carp draws flies.
Williams said the leaders of the legislature’s Democratic majority promised Gov. Dannel P. Malloy earlier Wednesday that they would schedule votes on the budget no later than Tuesday.
Nothing that occurred Wednesday night in House and Senate Democratic caucuses on the budget seemed to upset that timetable.
“It could be Friday, but most like Monday or Tuesday of next week,” Williams said.
Williams was confronted by the jewelers as he made the short walk from his third-floor corner office to the Senate, passing dozens of lobbyists standing on the other side of a velvet rope that gives lawmakers a clear path.
Joe Hebert, the owner of Hebert Jewelers of Milford, said after Williams left that a 7 percent tax on jewelry costing more than $5,000 would drive more of his business to the internet, especially diamond engagement rings.
“I’m scared,” said Hebert, who runs his shop with his wife and daughter. “It’s another nail in the coffin.”
One floor below, lobbyist Bill Malitsky approached Rep. Patricia M. Widlitz, D-Guilford, the unflappable co-chair of the Finance committee, arguing against a tax on cosmetic surgery.
Malitsky says some cosmetic procedures are a treatment for serious medical ailments, such as lesions caused by AIDS. They should not be taxable, nor should tax officials have access to medical records necessary to collect the tax, he says.
Standing near an elevator outside the House, Widlitz seemed to listen sympathetically and patiently. But she gave the same answer as Williams: There is no desire to open up the tax package, inviting a barrage of requests for similar consideration.
“There is something in this budget for everyone not to like,” Widlitz said. “The longer it hangs out there, the more things people find to object.”
Wednesday was the first session day since Finance and Appropriations voted their pieces of the budget to the House and Senate floors. Having had time to analyze the revised budget, lobbyists, clients and legislators took the opportunity to raise objections, Widlitz said.
“This is piñata day. Everyone is taking their shot,” said Sen. Bob Duff, D-Norwalk. “You basically had every special interest descending on the Capitol.”
Duff didn’t have to make the long drive to Hartford to get lobbied. He didn’t even have to leave his bed. An employee of New Country Porsche of Greenwich, where a 2011 Cayenne Turbo is available for $99,995, called him early at his home to express displeasure over the 7 percent luxury tax on automobiles costing more than $50,000.
“It was 5:53 a.m. to be exact. The gentleman told me his name and started going right into it,” Duff said. When Duff noted the hour and that he still was in bed, the caller apologized. He called later to say he thought he had called a business number.
Duff, whose district includes economically diverse Norwalk and some of Connecticut’s richest citizens in neighboring Darien, said he wasn’t angry.
“It’s everybody’s right to lobby and talk about issues that affect them personally,” Duff said. “I understand their argument. I completely understand their argument.”
The luxury tax was inserted into the budget to accommodate Democrats who complained that too much of a $1.5 billion tax increase, now trimmed to $1.4 billion, proposed by Malloy fell on the middle class.
Duff dug in earlier on other proposed taxes, such as a tax on airplanes and applying the sales tax to boats and marine services. He called those taxes job killers. They eventually were removed from the revised budget, but the luxury tax remains.
“The car dealers also got a plum in the budget by removing the tax on the trade-ins,” Duff said. “Nobody can get 100 percent here.”
Ken Crowley, a prominent central Connecticut car dealer, loitered outside the Senate, looking for legislators to lobby. He appreciates that Malloy and the legislators relented on the plan to assess a sales tax on the value of trade-ins.
But he said that $50,000 is too low a threshold for a so-called luxury tax, and many buyers of high-end cars have homes out of state, where they might buy and register their cars.
Next to the Capitol, in the cafeteria of the Legislative Office Building, a dozen owners of online businesses met to discuss how to fight the so-called “Amazon tax,” a requirement that online merchants collect the sales tax.
The budget would require such collections if the company has a physical presence in Connecticut, or if it does business through an affiliate located in the state.
Vin Villano, the owner of Clarus Marketing of Middletown, said owners of online businesses in Connecticut do not object to the concept of Internet transactions being subjected to the sale tax. Their concern is that Amazon and other big players do.
To avoid having to collect the tax, the big boys are threatening to terminate partnerships with Connecticut companies like Clarus. It is how they responded in other states with Amazon taxes.
“We believe 25 percent to 30 percent of our revenues disappear overnight,” said Villano, whose company expanded last year from 20 to 25 employees. “We’re collateral damage.”
Widlitz and Rep. Toni E. Walker, D-New Haven, the co-chair of the Appropriations Committee, said any changes in the spending or tax packages will come only if agreed to by the governor and legislative leaders.
“Those decisions are at a higher level than the committee chairs,” Widlitz said.
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