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Debate continues on Connecticut's budget proposal

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April 29, 2011

Connecticut

After the Connecticut General Assembly's Finance, Revenue and Bonding Committee passed a budget, debate has moved to the Connecticut State Senate, which is expected to pass the budget in early May.[1]

The proposed budget includes several new taxes, including a 7% so-called "luxury tax" on jewelry purchases in excess of $5,000. Joe Hebert, of Hebert Jewelers of Milford, went to the state capitol to urge lawmakers not to impose the additional tax. He said that the tax would hurt his sales, because people looking to purchase expensive jewelry would instead turn to the internet. Hebert said, "I'm scared. It's another nail in the coffin."[1]

The luxury tax would also apply to cosmetic surgery and to vehicles costing more than $50,000.

The budget also includes what is known as an "Amazon tax," named after the online seller of books. The tax would require online vendors to collect Connecticut sales tax if they have a physical presence in the state. In other states where such a tax has been imposed, large online retailers have typically severed relationships with state-based affiliates to whom the tax would apply in order to avoid having to collect it. According to one Connecticut merchant, if this tax stays in the budget, "We believe 25 percent to 30 percent of our revenues disappear overnight."[1]

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