In an attempt to capitalize on the huge explosion of Internet shopping, the state is taking its first steps into the controversial world of taxing online sales.
A key legislative committee, with the support of Gov. Dannel P. Malloy, has approved an "Amazon tax'' that is expected to generate a projected $9.4 million per year from Internet sales.
If approved by the full House of Representatives and the Senate, the tax would be the first in Connecticut history on online sales. Amazon, the well-known online retailer, is still in court in New York State after that state became the first-in-the-nation to create such a tax in 2008.
"I think the Amazon tax is an important stake in the ground,'' Malloy said Monday at the state Capitol. "We need to have a national conversation, and I'm more than happy to participate in that, about changing our policies with respect to sales tax. We have given a definitive advantage to certain types of retailers, and that is adversely impacting employment in a place like the state of Connecticut. I'm for leveling that playing field.''
The Malloy administration, through its tax commissioner, Kevin B. Sullivan, had initially taken a cautious view about taxing Internet sales and asked the legislature to postpone any action this year. But the administration has since changed its position.
"I've had a series of discussions that lead me to believe that we are going to see a much more robust national discussion, and if that's going to happen, then we should be at that table,'' Malloy said. "And this is an important step at being at that table. ... This is one area where most Republican governors and most Democratic governors actually agree that we've got to do something.''
The Internet tax has a series of complications that have made some officials question the actual amount of money that could be raised in the first year. The legislature's nonpartisan fiscal office places the number at $9.4 million in a $19 billion budget - a small percentage to start in the same way that New York projected $50 million in a $122 billion budget when the tax was first adopted in 2008.
