Amid overseas echoes of tax concerns by two of Fairfield County”™s largest employers, Connecticut businesses are convening in Hartford Feb. 24 to warn lawmakers that taxes and other criteria are critical in their decisions to expand within the state”™s borders.
The Connecticut Business & Industry Association holds its annual Connecticut Business Day at the state Capitol building that day, CBIA”™s central lobbying effort as legislators work through a short budget session in advance of next fall”™s elections.
With memories still fresh of mass layoffs by corporations followed by strong earnings in 2009, it is unclear what kind of a reception the business community will get from lawmakers who rammed through tax hikes and fee increases during last year”™s budget session.
Their deliberations could have a major impact on the willingness of corporations to keep their operations in Fairfield County, however, following a stretch in which policymakers were able to trumpet major economic development victories such as Starwood Hotels & Resorts Worldwide Inc.”™s decision to move its headquarters to Stamford; and scuff the ground over losses such as Time Warner Cable Inc. dumping the city as its headquarters site in favor of New York City.
CBIA has long maintained that the merry-go-round of changes to the business tax code makes Connecticut unpredictable, a key determinant for corporations assessing their options for placing operations.
“With the state”™s fiscal crisis, the eye of every legislator, as well as the public, is on the state budget and the deficit, trying to make sure we do something about it to get our fiscal house in order,” said Bonnie Stewart, vice president of government affairs at CBIA. “One of the big problems we face with the legislature is a lot of them don”™t know the different issues that businesses face ”¦ The way we can better solve them is to have employers get more involved.”
The Tax Foundation tabbed the growth of tax competition as one of the 10 biggest tax stories of the past decade. On the international front, industrialized nations around the world cut their corporate tax rates to become competitive, and more and more countries followed suit except the U.S., according to the Washington, D.C.-based advocacy group. Domestically, interstate tax competition has risen, the Tax Foundation added ”“ mostly in the form of tax incentive packages targeting specific industries or locales, rather than cutting rates and improving states”™ overall tax climates.
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The Tax Foundation ranked Connecticut 38th nationally for its overall tax climate, which would be bad news except for the fact that New York came in 49th on the list. The Empire State represents far and away Connecticut”™s best source for cross-border poaching of new businesses, particularly small financial firms; and New Jersey, the only other realistic competitor, turns up at 50th on the Tax Foundation”™s list.
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The heads of Diageo and Unilever, which have large workforces in Fairfield County, reportedly have threatened to move their London headquarters offices elsewhere if the British government does not lower taxes.
Liquor vendor Diageo has its North American main office in Norwalk, where it employed more than 700 people at last report. In the first half of its fiscal year ending Dec. 31, Diageo increased overall revenue 3 percent to $8.2 billion, though net sales in North America were down 6 percent.
Personal products seller Unilever has a large research installation in Trumbull that at the peak of the last business cycle had more than 1,500 workers.
In a television interview, Diageo CEO Paul Walsh warned his company may leave the United Kingdom for a better business environment, according to The Guardian, which reported Switzerland is one country rumored to be interested in luring Diageo.
“If the U.K., either from a corporate perspective or a personal tax perspective, becomes uncompetitive, we will be forced to look at alternatives,” Walsh said, as quoted by The Guardian. “We are a global business, we operate in 180 countries around the world. Our location here in London should not be taken for granted.”
Earlier, Unilever CEO Paul Polman had made similar comments.
“We do have choices where we put research laboratories, choices for manufacturing facilities and choices where we put our senior management,” Polman told The Guardian.
