Small businesses examining impacts of state sales tax hike

BRISTOL -- A proposed hike in the state sales tax has some small business owners wondering what the long term effects will be.

Connecticut Democratic lawmakers have proposed increasing the state sales tax to raise more than $660 million over two years to help curb potential cuts to education aid to cities and towns.

Democratic House members released a two year, nearly $39.9 billion budget plan Wednesday afternoon that calls for raising the sales tax to 6.85 percent from 6.35 percent. A House vote on the budget is expected the week of Sept. 11.

"It's a lot for people to take on," said John Rusgrove, co-owner of Parkside Cafe in Bristol. "Will it eventually be okay with it? I'm sure they will, the ones who it will not affect. They'll continue to eat out but it will have a trickle down affect on those people who have a tough time getting by."

The state faces a two-year, $3.5 billion budget deficit. Lawmakers have been unable to agree on a budget for the fiscal year that began July 1 and the following year.

"It's not going to be easy to swallow, no pun intended, but I think that's just the way it is, we just have to find our way to work within that and hopefully we`re not going to be looking at another increase in a few years," said Rusgrove.

Democratic Gov. Dannel P. Malloy doesn't support increasing the sales tax. Malloy last week proposed major cuts to local school aid, if a budget isn't approved by next month.

"I think we should stop leading the discussion with revenue," said Malloy. "I doubt very much that this budget will get through anywhere but it may be the basis to have some discussions."

How do we compare?

Connecticut sales tax is currently 6.35% Democrats want to boost it to 6.85% to close the budget shortfall.

Here’s how other nearby states rate when it comes to sales tax: