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Sales Tax Hike Not Driving New Canaan Car Sales

NEW CANAAN, Conn. — The new Connecticut budget goes into effect Friday, and with it, a host of new taxes . Among them is an increase in the sales tax rate from 6 to 6.35 percent -- 7 percent on automobiles costing more than $50,000. But that hasn't yet created a tide of people rushing to make their big-ticket purchases before the hikes kick in.

"It's been a non-factor," said Leo Karl III, president of Karl Chevrolet-Hummer . "We've had one person move up the purchase date of a car he'd ordered to avoid the increase."

Karl said he thinks many people are unaware of the higher sales tax rate. "The biggest media focus has been on the state workers unions, so the rest of the package has gone relatively unnoticed. Connecticut did so many things few people comprehend it all," he said. "Virtually every fee associated with our business — title, registration, et cetera — went up. Not a lot, it's nickel and dime stuff, but it adds up. As a business, we're sort of in a Catch-22. We elected not to market the tax increase, because it was sort of marketing a negative."

Among the other significant changes in the tax code is the elimination of the exemption on clothing costing less than $50, possibly creating early purchases of back-to-school outfits.

One positive of the increase is that 0.1 percent of the sales tax revenue will go to the town where it was generated. "Eighty percent of our business comes from outside of New Canaan," said Karl. "Hopefully the town finds something good to do with that added revenue."

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