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Malloy Proposes Reducing State Sales Tax Below 6%, Lowest Rate Since 1971

Gov. Dannel Malloy will propose streamlining the state's sales tax.
Gov. Dannel Malloy will propose streamlining the state's sales tax. Photo Credit: File

FAIRFIELD COUNTY, Conn. – A plan to lower the Connecticut sales tax to 5.95 percent – the lowest level the state has seen since 1971 –will be the highlight of the biennial budget Gov. Dannel P. Malloy will unveil Wednesday.

Malloy said he plans to reform the sales tax and eliminate certain exemptions.

“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,” Malloy said.

Under the plan, the sales tax would be reduced in two phases: from the current rate of 6.35 percent to 6.2 percent on Nov. 1, 2015, and then down again to 5.95 percent on April 1, 2017.

Eliminating minor exemptions would 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 would save consumers $70 million in Fiscal Year 2016, $155 million in Fiscal Year 2017, $300 million in Fiscal Year 2018, $311 million in Fiscal Year 2019, and $323 million in Fiscal Year 2020.

“Our economy continues to improve, and the state is seeing the largest private-sector job growth since 1998," Malloy said. "By streamlining and simplifying our sales tax structure, we can give working families the lowest sales tax level in four decades.”

The state sales was 6 percent from 1991 to 2011, ranged from 7 percent to 8 percent from 1976 to 1991, and was at 6 percent in 1975.

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

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