Connecticut Governor Rell Urges Connecticut Senators to Back Interest, Tax Deductions on New Car Sales

Federal Tax Credit Could Boost State’s Bottom Line by Increasing Sales Tax Revenues

February 3, 2009 -- Connecticut Governor M. Jodi Rell today announced she has asked U.S. Senators Christopher Dodd and Joe Lieberman to help ensure the federal stimulus package now before the Senate includes a measure that gives a federal tax credit to encourage new car sales.

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The measure, proposed by U.S. Senator Barbara Mikulski (D-Md.), would make interest payments on car loans and state sales and excise taxes on new car sales deductible from income for purposes of the federal income tax for sales occurring between November 12, 2008, and December 31, 2009.

“This has obvious benefits for consumers, the struggling auto industry and new car dealers in Connecticut and across the nation – but that’s not all,” Governor Rell said. “A federal tax break on new car sales could also have a big impact on Connecticut’s bottom line. Our state received about $285 million in sales taxes on new car purchases in Fiscal 2008. That is projected to drop to about $240 million in Fiscal 2009. If the stimulus encouraged new car sales, the state would benefit substantially from increased sales tax collections.

“We need to be looking for creative solutions to this economic crisis at all levels of government – local, state and federal,” the Governor said. “This is an idea that has the potential to do good across a wide spectrum of the economy.”

Source: Connecticut Governor