United in their fear of an impending financial crisis, the mayors of New Haven, Stamford and Bridgeport went before the General Assembly on Monday to request a 1 percent sales tax increase in each of their cities.
Joined by the mayor of New London, the group of Democrats expects that the marginal tax increase would generate several million dollars for their respective cities. Such a fiscal boost, they said, would add revenue without requiring the cities to raise property taxes, which are already high in the face of the sub-prime mortgage crisis.
New Haven City Hall spokeswoman Jessica Mayorga said the increase in sales tax provides a fair alternative to the current structure.
“Homeowners have been stretched as much as they can be stretched,” she said. “The tax will impact a more diverse group of tax payers.”
Mayorga provided the example of downtown New Haven, where a large portion of the consumer base is composed of commuting city workers and other non-residents.
As an optional local sales tax, the proposed policy would allow any municipality in the state to raise its tax rates by up to 1 percent.
Still, some mayors recognize that such localized discretion will turn tax policy into a game of strategy — high taxes in one town may push consumers, and eventually business, to other towns.
Hartford mayor David Perez, who was notably absent from the mayoral coalition, has expressed concern about such a scenario, spokeswoman Sarah Barr said.
“The mayor is against any proposals that put Hartford at a competitive disadvantage,” Barr said, adding that Perez supports property tax reform as a way to increase revenue. “We’re working hard to maintain businesses and grow businesses in Hartford.”
But Stamford Mayor Dannel Malloy said while cities might try to undercut each other, the effect of such a play would likely be minimal.
“Let’s put it in perspective — we’re talking about 1 percent,” Malloy said. “I don’t think a whole lot of people from New Haven are going to be traveling to Wallingford to do their shopping if they aren’t already doing so just because of 1 percent.”
Cities might be given the option to discern which commercial products they would like to tax, although that is still under discussion, according to Mayorga. She added that this might be effective in a city like Bridgeport, where the large number of car dealerships might be excluded. A 1 percent increase in taxes would likely affect car sales more than the sale of less-expensive products.
The policy has not yet been voted on in the legislature.