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    Tuesday, May 14, 2024

    Connecticut panel passes plan with fees on fantasy sports

    HARTFORD, Conn. — A legislative committee passed a Democratic tax package on Thursday that collects fees on fantasy sports and ends taxes on baby diapers and tampons but doesn't cover the entire projected state deficit, estimated at $900 million or more.

    Like the spending package approved on Wednesday by the General Assembly's Appropriations Committee, the tax package was based on January revenue estimates when Connecticut's deficit was $570 million.

    "We could potentially see revenue tick up," said Rep. Jeffrey Berger, D-Waterbury, co-chairman of the Finance Revenue and Bonding Committee. State officials expect to receive new state revenue estimates sometime around April 18.

    "So right now, potentially, (with) a moving target for revenues, that it's difficult to base a document with four weeks to go in the (legislative) session," he said. "So we want to have the correct, solid information to make adjustments and that's what we did today."

    Republican committee members, who represent the minority party in the General Assembly, were concerned both the spending and tax packages don't cover the state's entire fiscal problem. Rep. Vincent Candelora, R-North Branford, said it potentially moves the decision-making on the budget to closed-door negotiations between the governor and legislative leadership "where some pretty bad decisions could possibly be made."

    Gov. Dannel P. Malloy, a Democrat, acknowledged Wednesday the spending plan that cleared the Appropriations Committee was incomplete and he plans to unveil a revised budget next week that covers the entire deficit. The initial budget proposal he released in February was based on the $570 million deficit projection. Malloy has said he doesn't support increasing taxes to balance the budget.

    Berger said his committee also does not support tax increases this year.

    However, some Republicans argue that various fee increases in the bill equate to tax increases. For example, the bill increases fees municipalities must charge for various permits and filings, such as liquor permit filing fee, which increases from $2 to $20. The fee an employer and its employee would pay when submitting a grievance or dispute the State Board of Mediation and Arbitration would jump from $25 to $200.

    The bill also overhauls the state's sales tax permit for retailers, which now costs $100 for a five-year period.

    Under the new plan, retailers would have to renew their permits every two years. The new renewal fee would be $350 for retailers who remit the sales tax monthly and have an annual sales tax liability of at least $4,000. Those who pay quarterly with a liability of $1,000 to $4,000 would pay $100, while those who pay annually with a liability of less than $1,000 would pay $50.

    Two fantasy sports companies, FanDuel and DraftKings, supported the proposed state regulations of their industry but voiced opposition to the proposed 8.75 percent surcharge entry fees.

    "Taxing the 600,000 fantasy players in Connecticut isn't the right answer. Players should be protected with firm consumer protection regulations fantasy companies must adhere to — they shouldn't be taxed," FanDuel said in a statement. "Nearly 30 states are advancing legislation to protect fantasy play, and Connecticut is the only state proposing to tax players in this way."

    Meanwhile, the bill repeals some unpopular taxes, both recent and long-standing. For example, it ends sales taxes on coin-operated car washes, baby diapers, and tampons and other feminine hygiene products. A growing number of legislatures has been debating sales taxes on hygiene products, which detractors have come to call a "period tax."

    The bill also reduces taxes on luxury goods, boats and ambulatory surgical centers over time.

    The bill requires 9 percent of the state's room occupancy tax revenue be used for statewide marketing and promotion. The original funding in the budget was cut in the Democrats' proposed spending plan. This proposal also exempts certain hospitals from the state hospital tax, delays the scheduled increase in the teacher pension income tax exemption and eliminates the sales tax on parking fees at certain federal, state and local parking lots, including parks.

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