Connecticut Drops Sales Tax Fairness Bill

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A Connecticut bill that would have required remote retailers that had online affiliates in the state acting as sales agents to collect and remit sales tax was tabled as the legislative session ended on Thursday, May 6. Though the bill, HB 5481, passed the Finance Committee with strong support, lawmakers backed away from the bill after threatened to fire its Connecticut affiliates if the bill was signed into law.

"While we are disappointed that this bill was tabled, our campaign for sales tax fairness is far from over in Connecticut," said Oren Teicher, ABA CEO. "We need to make clear to Connecticut legislators that if they are interested in saving and creating jobs in the state it is crucial for them to support their in-state businesses. They dropped this bill following threats and bullying by out-of-state opponents, all the while ignoring a very real -- and critical -- situation that is slowly forcing the state's Main Street retailers to cut benefits, shed jobs, or close down altogether. By not acting, Connecticut's elected officials have allowed a manifestly inequitable condition to continue -- one that unquestionably favors out-of-state corporate retailers over in-state businesses."

Had HB 5481 been signed into law, out-of-state online retailers who earn more than $2,000 through online affiliates in Connecticut would have been considered to have a physical presence in the state. As such, these large online retailers would have been required to collect Connecticut sales tax, thereby leveling the playing field for Connecticut's bricks-and-mortar businesses. Fiscal analysts for the legislature had estimated the state would have gained $8.4 million to $9.3 million per year in tax revenue if the bill became law, according to the Journal Inquirer.

Following the end of the legislative session, Teicher stressed the importance of booksellers calling their legislators to express their strong disappointment that the sales tax fairness bill was dropped and that nothing was done to address the current inequity. "The only way to effect change and garner the attention of legislators is to speak up," Teicher said. "Don't wait: Call your legislators now at their district offices and urge your retailing neighbors to do likewise. Opponents of sales tax equity are no doubt calling legislators to thank them for dropping the bill. It's important that elected officials hear from booksellers now, so that they understand the real effects of their inaction."

Teicher noted that booksellers could explain how the inequity affects their businesses on a day-to-day basis and could stress that this is a tax compliance issue, not a new tax.

For more information, or for more tips on calling lawmakers, booksellers should call ABA Senior Public Policy Analyst David Grogan at (800) 637.0037, ext. 6662.