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Manchester business owner takes tax hit

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MANCHESTER - It's another day of scrubbing and spraying at the Connecticut Carwash in Manchester.

While the wheels are turning, this business is facing a rough spot it can't wash off with soap and water.

"The State of Connecticut came through and they imposed a tax on our entire car wash industry,” said owner Todd Whitehouse.

"When the budget passed on June 30th, we were notified that as of July 1st, 12:01 am we were to collect the sales tax at that point."

Whitehouse is now responsible for the state's 6.35 percent tax on every service at his four locations.

He tried to talk with lawmakers when the idea was originally brought up during budget discussions.

"Some of them said just raise your prices, and we're a discretionary purchase,” said Whitehouse. “It's a price sensitive market, and we didn't feel that was a reason for us to increase our price."

There is another problem facing the car wash - the original budget bill put an exemption on coin-operated machines.

"The mechanical possibility to collect the sales tax out of this device is impossible,” said Whitehouse.

Somehow that part didn't make it into the final budget.

For now, Whitehouse is not raising prices for customers but paying each sales tax out-of-pocket, not an easy feat for a small business.

The move by lawmakers upsets his customers.

"We are taxed to death and for what?” said Leon Lanata, “What do we get for it? We’re just a welfare state."

So why didn't the coin machine exemption stay in?

We caught up with Representative Jeffrey Berger who is Co-Chair of the Finance Committee.

"It was a decision made through leadership to add the coin-ops back in," he said.

“There was some discussion that said there's not many coin-operated car washes anymore in the State of Connecticut,” said Berger, “Not a position I agree with but I think there was some confusion with that."

"The operators of the car wash make a compelling case," he said.  "It's certainly our desire to relook at that issue."

Nothing can happen until the next legislative session begins in February.

Representative Berger said the car wash tax is estimated to bring in more than $13 million over the next two years.

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