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Conveyance Tax Issue Hits TV

Realtors: The tax is a hidden levy; Lawmakers: Cities, towns count on the money

By CHRISTOPHER KEATING | Capitol Bureau Chief

May 29, 2008

Gearing up for the legislature's special session, the state's Realtors are taking the unusual step of running television commercials to persuade lawmakers to block the two-year extension of the real estate conveyance tax.

The tax has become highly controversial at the state Capitol as the Realtors have squared off against the Connecticut Conference of Municipalities, which strongly supports the extension. Mayors and first selectmen say they need the $40 million that the increased tax generates annually to balance their budgets.

The Realtors, however, say the tax is a hidden levy that is rarely mentioned until the closing on a real estate sale, and the levy has become particularly onerous at a time of falling real estate prices for many homeowners.

"Is this really a good time to raise taxes?" a woman asks during the 30-second television ad. "Increasing the tax on home sales will rob you of equity and hurt people who can least afford it. Contact your local legislators and the governor today. Tell them not to raise your taxes."

The woman , standingoutside a yellow home, says, "In a tough economy, we all need to live within our means. Even the legislature and the governor."

But the Democrats, who control the General Assembly, have repeatedly said the tax generates money necessary for cities and towns. The increased tax was created in 2003 to close a budget gap under then-Gov. John G. Rowland, and it has been extended three times by the legislature.

When asked how many votes he has in the House of Representatives to extend the tax for another two years, Speaker James Amann said, "More than enough."

The commercials will be shown several hundred times on broadcast and cable channels over the next two weeks, said Patty McQueen, a spokeswoman for the Realtors.

During the special session that is scheduled for June 11, lawmakers will be asked whether to extend the municipal portion of the tax. That portion has increased to 0.25 percent of the sales price in most towns, up from 0.11 percent in 2002. As a result, the increased tax on a $300,000 home would be $420. Distressed towns have the option of pushing the tax rate even higher to 0.5 percent.