- Associated Press - Tuesday, December 15, 2015

HARTFORD, Conn. (AP) - A host of changes to Connecticut’s tax structure were recommended Tuesday by a panel of past and present state legislators, accountants, and experts in tax law, economics and finances.

The State Tax Panel, created by the General Assembly last year, wrapped up a yearlong review of Connecticut’s state and local taxes. It marked the first time since 1991, when the state enacted a personal income tax, that such a major tax study has been undertaken.

While the final document is not due to state lawmakers until later this month, members agreed Connecticut must change how it taxes businesses.

Anika Singh Lemar, a clinical associate professor at Yale University, said experts told the panel that the state’s current tax on net corporate income is “archaic” and should be replaced. While there was discussion of possibly instituting a value-added tax, a tax essentially imposed on the value added to a product, the group decided to recommend further study of possibly replacing several state business taxes with one tax.

Lemar said the business community recently voiced strong opposition to the value-added tax idea, without offering many alternatives.

“It just makes it very hard,” Lemar said, adding how she wished the business lobbyists voiced their concerns earlier so the panel could have done more to address business taxes - a key issue facing Connecticut as companies like General Electric Co. threaten to move out of the state.

The advisory panel agreed Tuesday to recommend scrapping sales tax holidays, even though Department of Revenue Services Commissioner Kevin Sullivan said the tax-free days appear to boost business for the state’s retail industry. The group agreed, however, to keep the sales tax exemption on all food prepared at home, no matter the price.

The recommendations will be forwarded to lawmakers and other groups studying Connecticut’s competitiveness for further consideration.

In related news, Gov. Dannel P. Malloy told the Middlesex Chamber of Commerce he plans to reintroduce legislation in the next regular session of the General Assembly, which begins February, that would protect transportation revenues from being spent on other programs. A similar bill taken up during the recent special legislative session fell short of the three-quarters support needed to place a constitutional amendment before the voters in November. Malloy also warned he’d campaign against those lawmakers who oppose it.

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