State Republican chairman Chris Healy says that the state's plan to collect the sales tax for online transactions is "a stake in the heart of Connecticut's economy'' that will backfire.
The highly controversial sales tax is being challenged in New York State by Amazon, the well-known retailer that has branched out from its original chief mission of selling books. Since the legality of the online sales tax remains unsettled, some legislators believe the state should avoid the issue until there is greater clarity.
Gov. Dannel P. Malloy and the Democratic-controlled tax committee disagree, and they collaborated on an agreement on the so-called Amazon tax that is projected to generate $9.4 million in sales tax in each of the next two fiscal years.
"Governor Malloy doesn't grasp the meaning of the interstate commerce clause or the devastating effect another tax on the free flow of goods and services would have on Connecticut businesses," Healy said in a statement. "What is more disturbing is the Governor and Democrats believe the only way to close the budget gap is to tax everything that lives, breathes and moves."
Malloy had told reporters on Monday at the state Capitol that the Amazon tax "is an important stake in the ground'' regarding taxation. His tax commissioner, former state Senator Kevin B. Sullivan, had originally urged the tax committee last month to be cautious about making any changes in online sales because of the uncertainty of its legality.
But the committee's two co-chairs, Sen. Eileen Daily of Westbrook and Rep. Patricia Widlitz of Guilford, were strongly in favor of the Amazon tax.
Healy predicted that Connecticut could lose hundreds of jobs due to the tax because some web sites employ subcontractors who are involved in processing and shipping goods that are purchased on the Internet.