Sales tax on engineering services may hurt STEM effort in CT

There are a number of great arguments against the proposed sales tax on engineering services. It will make Connecticut engineering firms less competitive, it will hurt smaller engineering firms, etc.

But Maria Loitz, Director of Marketing at BVH Integrated Services, P.C. wrote to her representatives about the impact of the proposal on the state’s efforts to encourage students in science, engineering, technology and math (STEM).

“The tax on engineering services will actually have the opposite effect as intended by the Connecticut legislature, and send jobs to neighboring states that do not have a sales tax on engineering services. It’s a very competitive environment, and a newly implemented sales tax will certainly make our firm less competitive and will result in a loss of work, which will lead to a loss of profits, lack of growth, loss of jobs, and ultimately, a loss of income to the State.

“At a time when the State of Connecticut is investing $1.5 billion in Next Generation Connecticut to grow jobs in the STEM fields, why would the legislature impose this new tax on engineering firms, which would ultimately stump growth of engineering jobs in Connecticut? The result may be that Connecticut taxpayers will be subsidizing engineering jobs in neighboring states rather than in Connecticut.

“It is important to note that only 3 states in the country tax engineering services: New Mexico, South Dakota and Hawaii. Many engineering firms in our industry have multiple offices, including my employer. Given the business environment in Connecticut, it would be easy for many of these firms to expand and add jobs in neighboring states rather than in Connecticut.

“I am very passionate about this issue because I am a life-long resident of Connecticut, my family lives here, and it’s my hope to someday retire in Connecticut. With the full support of my employer, I am also actively involved in mentoring the youth of Connecticut’s urban areas – including New Britain, Hartford, New Haven, Waterbury, and Bridgeport, introducing them to careers in the architecture and engineering fields. It’s our goal to grow our firm in Connecticut, but we need a strong pool of engineers in order to achieve this goal, along with a fair and competitive business environment.

“I have been employed in the architecture and engineering industry for the past 20 years. Being involved in fee negotiations with clients on a daily basis, I am very confident that this new tax would create a significant hurdle for our firm’s future growth in Connecticut.”

Thanks, Maria. Great point!