In a break with tradition, the Hartford Courant covered hard news on page one today, to wit, an article about a proposal to allow big cities to impose a 1% sales tax. The idea is appallingly stupid for the reasons pointed out by several legislators:
But Republican and some Democratic legislators questioned the idea, saying that retailers would not build shops in those cities and instead would develop stores in surrounding suburbs with lower sales tax rates. In addition, they said that increased sales taxes would disproportionately hurt the poor who would be shopping in the cash-strapped cities.
I would add that car dealers are likely to quickly migrate and that established stores are likely to also move or die. It is amazing to me that one of the cities pushing this is New London, which has such a small geographical area that it takes no time at all to go to Waterford to shop. I would suggest a poll of the downtown New London merchants to see how they feel about being put at yet another competitive disadvantage.
Hartford Mayor Ed Perez didn’t sign on to the full stupid:
Hartford Mayor Eddie Perez did not testify Monday, and DeStefano said that Perez wants the increase only if it is applied statewide. A higher sales tax rate could force shoppers to avoid Hartford and head to Westfarms mall on the West HartfordFarmington line or Buckland Hills mall in Manchester.
On the surface Perez’ position makes more sense, but if you think about it, it is also stupid. First, it would serve to reinforce, rather than dissipate, the present property tax based incentives for towns to salivate over getting big box stores and other blight. They court them now for the property taxes; with this added tax they would stand to gain sales taxes as well. Second, if the taxes were imposed by the towns the money would go disproportionately where it’s not needed: to the very suburbs that have been sucking the life’s blood from the cities for decades. In our area most of the retail development has taken place in Waterford. There is no logical reason why Groton, New London and Montville residents should be paying taxes to Waterford. What would make sense, and will therefore never happen, is the imposition of a statewide increase of 1%, distributed to the towns on a per capita basis. The money would go where it’s needed, at least more so than under Perez’ plan, and towns, particularly the suburbs, would be more likely to prefer that retail development take place elsewhere, since their share of the take would not be dependent on being a host to the disease. That extra money could reduce reliance on property taxes, further curbing enthusiasm for development.
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