CT sales tax collections at record levels after 2019 holidays

Black Friday 2019 shoppers at Awesome Toys and Gifts in Stamford, Conn.

Black Friday 2019 shoppers at Awesome Toys and Gifts in Stamford, Conn.

Matthew Brown / Hearst Connecticut Media

After Connecticut expanded the number of online retailers subject to the state’s standard sales tax of 6.35 percent, tax collections rose 5.9 percent in the first six months of the fiscal year to the highest level on record.

Connecticut generated an additional $102.5 million in sales-tax revenues between July and December compared to a year earlier, producing a record $1.94 billion for state coffers according to the Connecticut Department of Revenue Services.

Connecticut’s sales tax collections typically swell in the first six months of the calendar year, as retailers remit sales taxes from the last days of the holiday shopping season and businesses start new budget cycles.

But with a shortened holiday season this year due to the late arrival of Thanksgiving, Connecticut shattered its previous December sales tax mark, with the state collecting nearly $500 million last month for a 17 percent increase over the previous December high in 2014.

Last week, the U.S. Department of Commerce estimated a 5.8 percent increase nationally in retail and food service sales for the month of December, compared to a year earlier.

Sales taxes represent Connecticut’s second largest source of revenue at the state level after income taxes, accounting for 23 percent of state revenue in the 2019 fiscal year that ended last June.

After taking office a year ago, Gov. Ned Lamont sought an expansion of Connecticut’s sales tax base, eliminating tax breaks for some industries. That included changes to the threshold at which online retailers must fork over sales taxes on transactions — under the new rules, dotcoms must do so if they have at least 200 transactions in Connecticut resulting in at least $100,000 in revenue.

Connecticut also eliminated a tax break for the sale of digital products like music and video downloads, which took effect in October.

Alex.Soule@scni.com; 203-842-2545; @casoulman