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October 16, 2019Cart

Business

by Fairfield County Business Journal
by FCBJ

CT Democrats, GOP want redo on controversial grocery tax

Democrats and Republicans alike are questioning the new sales tax surcharge on prepared foods, set to go into effect on Oct. 1.

Connecticut Senate President Martin M. Looney.

Senate President Martin M. Looney, D-New Haven, Senate Majority Leader Bob Duff, D-Norwalk, and fellow Democratic state senators have written to the Connecticut Department of Revenue Services  to change its interpretation of the sales tax application to meals. The Democratic senators said they believe “this unexpected interpretation” from Revenue Services does not reflect the legislative intent “that was clear to all parties during budget negotiations.”

In the letter the Democratic Senators state:

“We were shocked to see that DRS has somehow interpreted the language in the budget (PA. 19-117) to significantly broaden the base on what meals and beverages would be covered by the sales tax. This interpretation goes against the legislative intent of the new law and against the interpretation of the new law by all three of our nonpartisan offices.”

The tax is scheduled to add a 1% surcharge on restaurant food or on “prepared meals,” meaning that those buying a prepared meal at a supermarket would pay a 7.35% sales tax, rather than the base rate of 6.35%.

The nonpartisan Office of Fiscal Analysis has projected that the tax would generate $158 million over this fiscal year and next, some 40% more than lawmakers said they expected. By 2020-21, consumers would pay more than $90 million per year.

The affected items range from ice pops, doughnuts and bagels to pizza slices, hot dogs, smoothies, power bars, and pre-packaged bags of salad. It also applies to beer, fruit juices, milkshakes, hot chocolate, wine, and distilled alcohol, as well as coffee and tea if already prepared for drinking.

The Democrats have asked the department to issue a revised policy statement.

Meanwhile, Senate Republican Leader Len Fasano, R-North Haven, has called for a special session to be called in order to rectify the situation.

“This Democrat grocery tax embarrassment is a clear example of why people don’t trust their Connecticut state government,” Fasano said. “If Democrats are so ‘shocked’ about the state’s interpretation of the policy they voted ‘yes’ on, then they need to clean up their mess in a special session.”