REPORT ON BILLS FAVORABLY REPORTED BY COMMITTEE

TITLE OF BILL:

AN ACT ESTABLISHING PILOT PROGRAMS EXEMPTING HUBZONE BUSINESSES FROM THE SALES TAX.

SPONSORS OF BILL:

REASONS FOR BILL:

To establish a sales tax exemption by small businesses located in a “historically under utilized business zone” (HUBZone) established by the federal Small Business Administration. To qualify for this program under the law, a business must be located in a HUBZone and must be owned or controlled by U.S. citizens. At least 35% of its employees must live in the zone.

RESPONSE FROM ADMINISTRATION/AGENCY:

Mayor Eddie Perez, Mayor of Hartford, CT testified the state of Connecticut has an extensive HUBZone infrastructure particularly surrounding some of the state's largest and most populated cities. The largest HUBZones in the state are located in Hartford, New Haven, Waterbury and Bridgeport and several other locations garnering a significant amount of HUBZone property as well yet Connecticut is drastically underutilizing the HUBZone program. Because the legislature has made it a priority to augment economic growth in the state and create jobs for Connecticut residents, the HUBZone program should be something that is enthusiastically promoted by state leaders. The HUBZone programs promote economic growth and more jobs in economically depressed areas. In Hartford, more utilization of the HUBZone program would help connect the current successful development in downtown to surrounding neighborhoods that are not necessarily the first place that businesses look to invest their money. If there were more incentives to invest in these locations, it would create less of a vacuum of the current capital being invested in Hartford and would not only disperse current available capital more evenly throughout the city but also would increase the amount of capital being invested. Also, such an incentive would be attractive to out of state small businesses looking to relocate. I would respectfully submit that the state could provide ample incentives for small businesses by developing a plan to certified HUBZone businesses a break on their sales tax for a span of six years. After the sixth year of certification, businesses would be phased back to the normal sales tax level. Once a small business has received its HUBZone certification, there are three different types of potential federal HUBZone contracts: competitive, sole source, and full and open competition. There are currently 130 census tracts in Connecticut that are considered HUBZones. There are zones in every county of the state there are currently 50 certified HUBZone businesses in the state.

Mayor John DeStefano, Mayor of New Haven, CT testified this bill would provide exemption from the sales taxes on goods or services sold if the seller is a small business in the HUBZone. This offers a competitive advantage to doing business in New Haven, CT. This is an innovative way to strategically improve the financial performance of a business's bottom line. New Haven has eighteen areas designated HUBZones.

NATURE AND SOURCES OF SUPPORT:

None stated.

NATURE AND SOURCES OF OPPOSITION:

None stated.