O’Neill & House Republicans Propose Measures for $247 Million in Sales Tax Cuts, Boosting Economy and Growing Jobs

Rep. Arthur J. O’Neill (R-69) stood with House Republicans last week announcing a plan to save consumers a total of $185 million by restoring tax exemptions for clothing, footwear and over-the-counter medicine, and provide small business relief by eliminating a special unemployment assessment of $59 million - without adding to the state deficit.

He said the total cost of $247 million for the initiatives will be covered through available funds and will not create future budget deficits.

“The only way we will get the economic recovery in Connecticut that we ought to have is to fundamentally change the state’s business environment, allowing the growth of small businesses that create jobs” said Rep. O’Neill.  “These proposals are a step in the right direction.  There are 65,000 working age people who have left Connecticut, and we are in the bottom of almost every national category in terms of fiscal strength and job growth.  Forcing Connecticut Residents to move to other states to look for work is the wrong way to reduce unemployment. We need to start taking meaningful action that will set the stage for job creation.”

Restoring the tax exemption on clothes and footwear:

·         The clothing and footwear exemption for items under $50, projected to cost $167 million, is slated to be restored in July of 2015. Republicans said that it is prudent to advance that timeline to April 1 of this year - Democrats took away the exemption in 2011 while attempting to balance the budget. The exemption will increase sales and help businesses meet their bottom lines.

Eliminating Special Assessment on businesses for the state unemployment fund:

·         The legislators said pre-paying the interest of $59 million on money borrowed from the federal government to cover unemployment benefits at the height of the recession will spare businesses from having to again foot the bill. Businesses, many of which did not layoff a single worker, have been saddled with three consecutive special assessments to cover the interest, costing them $71 million since 2010.

Republicans noted respected state economist Donald Klepper-Smith, in the business 35 years, who earlier this week said “Let me be very clear, the governor does not create jobs, businesses do. The governor’s claim on job growth rings hollow. State government does not create jobs. Their job is to create an overall environment for business growth.’’ 

Restoring tax exemption on non-prescription drugs:

·         Restoring the sales tax exemption for over-the-counter drugs that Gov. Malloy eliminated in 2011 will also be “revenue neutral.’’ Republicans proposed covering that loss of revenue of $21 million by keeping the Earned Income Tax Credit at the current rate of 25 percent of what a person would receive from filing their federal Earned Income Tax Credit returns. The rate is scheduled to go up to 30 percent of the federal rate over the next two years.

O’Neill said House Republicans will present a full agenda for the coming legislative session that begins Feb. 5.