Gov. Ned Lamont directed state agencies Friday to waive credit and debit card transaction fees for the fiscal year that begins July 1, a move that would save residents and businesses $6 million over the coming 12 months.
But while the Democratic governor hailed this as inflation relief, Republican legislative leaders called it a token attempt at relief — translating into a few dollars per household or business — and renewed the GOP’s demand for a state income tax cut.
“Each of us is feeling the pressure of inflation, and I am committed to reducing costs for businesses and residents where the law allows,” Lamont said. “Our administration will be working with the General Assembly to revisit all such fees that are implemented by state statutes, and we will review arrangements that we have with credit card companies as we continue to streamline and modernize state government.”
Among the agency fees that will be affected by Lamont’s order are the Department of Motor Vehicles, Department of Consumer Protection, Department of Energy and Environmental Protection, and the Department of Public Health.
Lamont, who is running for reelection this November, teamed with the legislature’s Democratic majority to order more than $660 million in tax relief this year — one of the largest reductions in state history.
But Republicans counter that more than half of those tax cuts are one-time relief. They also argue it was far too modest, particularly given both the $7 billion in current and projected budget reserves the state enjoys and spiking inflation costs that are rocking Connecticut families and businesses.
The U.S. Bureau of Labor Statistics reported an 8.6% hike in the Consumer Price Index earlier this month, the highest level since 1981. And the AAA Northeast reported an average retail price of gasoline Friday of $4.90 per gallon, up from $3.10 one year ago.
Lamont “is showing he is grossly out of touch with the impact inflation is having on people,” said House Minority Leader Vincent J. Candelora, R-North Branford. “The governor needs to stop dancing around the edges, and we need to have a real conversation about tax relief — like a reduction to people’s [state] income taxes.”
House and Senate Republicans are pressing Lamont and Democratic lawmakers to hold a special session before the new fiscal year begins July 1 to enact an additional $750 million in tax cuts — including an income tax rate reduction aimed at most middle-income families.
The GOP also wants:
• A temporary reduction in the sales tax from 6.35% to 5.99% and suspension of the 1% surcharge on restaurant food and other prepared meals.
• Suspension of the diesel tax, which jumps 9 cents per gallon on July 1.
• Repeal of a highway use tax on large commercial trucks, which takes effect Jan. 1.
• And dedication of an extra $42.5 million for energy relief for poor households.
“If the governor thinks $6 million will help ease burdens on working- and middle-class families, imagine what we could do with $750 million more in relief,” Senate Minority Leader Kevin Kelly, R-Stratford, said. “Connecticut has the power to deliver far greater relief, but we must act by June 30.”
Democrats note that Republicans have not shown how they would pay for their tax cuts over the long term.
Lamont also has said that with many economists warning of a major national recession in 2023, Connecticut must be careful not to be too aggressive with tax cuts now and risk throwing state finances out of balance one year from now.