A tax threat for vended laundries has been heating up in Connecticut in recent months. Connecticut Governor Ned Lamont has unveiled his state budget plan, which includes an expansion of the sales tax base to include new services – including laundry services.
As of this writing, Governor Lamont’s budget is the largest proposed gubernatorial tax increase in 2019. He ran for office pledging not to raise tax rates. However, when faced with a $3.7 billion two-year budget deficit, the governor announced that new taxes would be necessary.
Clearly, laundries play an integral role in providing a basic service to Connecticut residents who don’t enjoy access to in-home laundry services. Sales tax exemptions for self-service laundries are an important tax provision that have far-reaching social and economic benefits. Laundries protect the financial security of low-income working families and other vulnerable populations. Taxing laundromat services is regressive, because these businesses serve low-income renters, senior citizens on fixed incomes, students and others who can’t afford to purchase washers and dryers on their own.
The median household income of a typical self-service laundry customer is $23,000 per year, according Coin Laundry Association statistics. Applying sales tax on these transactions is a regressive tax that isn’t paid by wealthier individuals who can afford to purchase washers and dryers for their own homes.
There is also the risk that requiring sales tax collection from self-service laundry consumers would force laundry owners to purchase new equipment or pay for expensive upgrades to perfectly functioning existing equipment. Because the vast majority of vended laundries accepts payment by quarters only, taxing self-service laundry services would require either an additional 25 cents of tax (substantially increasing the end-cost of the service) or the purchase of new equipment to accept final costs in non-25-cent increments (an unnecessary and high-cost expense for business owners).
To fight this threat to the industry’s sales tax exemption in Connecticut, the CLA has engaged Capital Consulting – a lobbying firm that will work to educate lawmakers as to the negative impact this proposed tax would have on laundry owners and the communities they serve. The state’s legislative session runs through mid-June.
The majority of states exempt self-service laundry from sales tax. In fact, 42 out of 45 of the states that levy a general sales tax exempt self-service laundry from that tax. Only three states charge sales tax on self-service laundry – Hawaii, New Mexico and West Virginia.
