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CT Residents to Pay State Sales Tax on Amazon Purchases

What's more, Amazon.com will be building a new distribution center in Connecticut and will create up to 300 jobs over the next two years under a deal announced Monday by Gov. Dannel P. Malloy.



Starting Nov. 1, Connecticut residents who make purchases from online retailer Amazon.com will be required to pay 6.35 percent in state sales tax on each transaction, thus generating much-needed additional tax revenue for the state.

What's more, Amazon.com will be building a new distribution center in Connecticut and will create up to 300 jobs over the next two years under a deal announced Monday by Gov. Dannel P. Malloy.

The deal is expected to generate more than $15 million a year for the state, according to a press release from the governor's office. Amazon is yet to select a site for the new distribution center.

“All in all, this is a win for our state’s taxpayers, our main street retailers, and our workforce,” Malloy stated in the release. “Amazon’s multi-million dollar investment and the hundreds of jobs that will come with both the construction and operation of their future facility will unquestionably boost our local economy."

Under current federal law, out-of-state retailers are not required to collect tax on sales to Connecticut. Residents are required to pay sales tax on items they buy from online retailers, but in reality, most ignore the law. Currently Congress is considering legislation that would require online merchants to collect and remit taxes in the states where they do not have a brick and mortar presence, or "nexus."

Malloy said although Amazon's agreement with Connecticut to collect and remit sales tax only partially addresses the problem (i.e. not all online retailers are willing to make such deals with the state, and Amazon is one of the first), it is "a great step," and will have a secondary effect of allowing state merchants to compete more fairly against Amazon.

"We… look forward to working with Governor Malloy toward passage of the legislation now being considered by Congress that would finally resolve the sales tax issue, level the playing field for all retailers, protect states’ rights and allow states to collect the revenue owed," said Paul Misener, Amazon vice president, global public policy.

“With strong support from Governor Malloy, this has been one of our top priorities for over a year now,” said Department of Revenue Services (DRS) Commissioner Kevin Sullivan. “It’s a great result for our consumers and businesses, state and local revenue, new investment and new jobs. Amazon is a great company. Good tax policy can be good business policy too.”

Mary Davis February 05, 2013 at 11:09 PM
Why doesn't the legislature stop raising taxing on us...how about CT reduces spending! Is Kevin Sullivan completely out of touch? How is increasing costs to the consumer a great result for consumers? How about CT stop or reduce sales tax on Connecticut business's that compete head to head against Amazon?.. that would put them a level playing field as well... and would actually be better for consumers.
Dr. Robin Appleby February 06, 2013 at 12:19 AM
The Republican governor of Louisiana, Bobby Jindal, has proposed totally eliminating the personal and business income taxes on the citizens of Louisiana.
Dr. Robin Appleby February 06, 2013 at 12:29 AM
The Republican governor of Nebraska, Dave Heineman, proposed eliminating the personal income tax on the citizens on Nebraska. He also wants no taxation of retirement income, social security income and no taxing of small business income.
Ken February 06, 2013 at 03:10 AM
Let's be honest here and all of us stand up and admit we do NOT answer Yes to the sales and use tax question on the CT. income tax. This is not a question unique to CT. It is a question on the income tax returns for almost every state. I do taxes as a part time business and I have NEVER EVER had a person self disclose that they may be responsible for use tax on out of state purchases. The reality is that when you, I or your neigbor buy on line with the 6.35 % sales tax savings in mind, we ARE hurting local and in state brick and mortor businesses. Under current law, sales tax does not have to be collected by sellers without tax nexus, not just in CT but in most states. Expanding this tax to include on line sales for sellers without nexus in the state of CT. does level the playing field for local businesses. This issue of on line sales and sales tax is not unique to CT. It is an issue that every state faces with regards to lost tax revenue.
Simcha Gralla February 06, 2013 at 03:21 AM
Connecticut is not going to do away with a sales tax any time soon, and is right to try both to even the playing field for local businesses and to recoup taxes lost to out-of-state Internet sales.
Simcha Gralla February 06, 2013 at 03:23 AM
The Republican governor of Louisiana will pay for removing the income taxes by raising sales and usage taxes. The Republican governor of Nebraska will pay for removing the income tax by raising sales taxes and eliminating sales tax breaks for businesses. All they are going to do is shift the burden to those folks that have to spend a higher percentage of their incomes, that is to say those with lower incomes.
Ken February 06, 2013 at 03:34 AM
As far as sources of revenue to fund state operations, most conservatives are actually pushing for an INCREASE or expansion of the sales tax base to offset a reduction in the income tax. The source of funding for state operations comes down to a coflict of whether a sales tax that covers too many items is regressive in nature versus an income based tax. No Gov. Dem, Repub, or Conservative is saying they don't still need the same level of existing funding to meet state operating and debt service expenses. The only issue in discussion is the source of funds. A sales tax driven revenue source depends on consumer spending as the revenue base. If sales became the primary driver of state revenue sales tax WOULD have to be expanded to on line sellers regardless of their nexus status. States would need the tax revenue generated from on line sales as part of the total revenue they need to fund operations. Without this revenue source there would have to be a dramatically expanded sales tax base, an increase in the sales tax or a combination of both to offset reductions in other revenue sources while still giving out of state sellers a freebie.
Steven DeVaux February 06, 2013 at 12:35 PM
Too little, too late. Connecticut is 20 years behind other states in terms of leveling the playing field for businesses. The businesses are voting with their feet and moving vans as is their right. Why would businesses stay in a toxic environment for them when they can just sprout up over the line into New York and Massachusetts and still service Fairfield and Litchfield counties. No, the idiots elected, appointed to state government were not the sharpest tools in the shed...and still aren't.

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