With the real estate market at its weakest in years and the sub-prime mortgage crisis continuing, the state's Realtors are making their biggest push yet to reduce the state's conveyance tax by $40 million as a stimulus package for the sluggish economy.
Through radio, television, and print advertising that will last until the General Assembly session ends May 7, the Realtors will campaign to cut back the short-term increase in the tax that was enacted in 2003 to close a state budget gap.
The tax is now 0.25 percent of a property's sale price, up from 0.11 percent.
The Realtors have been locked in a five-year battle with the Connecticut Conference of Municipalities, which says that cities and towns need the extra $40 million generated by the increased tax on the sale of all properties. The municipalities group is fighting back hard, saying the cities and towns have come to rely on that money to fund local services.
"It's part of the transaction price. It's the cost of doing business," said James Finley, CCM's chief lobbyist. "If the Realtors are so concerned, why don't they lower their 6 percent [commissions]?"
"Their arguments are Chicken Little, the sky is falling," Finley said. "What they're asking for is not good public policy." He challenged the Realtors to prove the increase has derailed a single property sale.
When first enacted, the increase in the tax was temporary, scheduled to end in 2004. But the legislature has extended the sunset date three times. Now, unless the legislature acts, the tax would not drop back to the 2002 level until June 30, 2008.
Republican Gov. M. Jodi Rell, a fiscal conservative, agrees with the real estate agents and favors pushing back the rate this year, her spokesman said Thursday.
"With fear in the marketplace of falling home prices, the last thing Connecticut homeowners need is the government taking another slice of their hard-earned equity," said Ken DelVecchio, the president of the Connecticut Association of Realtors. One of the hard-hitting, 60-second radio advertisement states, "It's a sneaky little way for government to grab more of what's yours, and most people don't even know about it until it's too late. You pay property taxes every year, and then they have the nerve to hit you with another property tax when you decide to sell? Stop this driveway robbery."
But CCM has outmaneuvered the Realtors in the past, and they intend to continue the battle.
Reprinted with permission of the Hartford Courant.
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