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Senate Dems say tax officials inflated prepared foods levy

State Senate President Pro Tempore Martin M. Looney (D-New Haven), right, and Senate Majority Leader Bob Duff (D-25). (Keith Phaneuf)

Senate Democrats backed away Monday from the new sales tax surcharge on prepared foods, saying Gov. Ned Lamont’s administration made it far broader in scope than lawmakers intended.

The announcement comes on the heels of objections raised last week by House and Senate Republicans, as well as new cost projections from nonpartisan staff that showed consumers will pay $44 million more than originally projected over the next two years.

“We were shocked to see the DRS has somehow interpreted the language in the budget to significantly broaden the base on what meals and beverages could be covered by the sales tax,” Senate President Pro Tem Martin M. Looney, D-New Haven, and Senate Majority Leader Bob Duff, D-Norwalk, wrote in a letter to Department of Revenue Services Commissioner Scott Jackson. “This interpretation goes against the legislative intent of the new law.”

All but three of the 22 Democrats in the 36-member Senate signed Looney and Duff’s letter. And a spokesman for the Senate Democratic caucus said the other three did not oppose the letter, but simply couldn’t be reached before the message was sent out Monday.

Lawmakers have been scrambling since last week when GOP legislators disclosed a new policy statement from revenue services officials offering retailers guidance on how to apply the new sales tax surcharge on prepared foods when it takes effect on Oct. 1.

The tax hike was described — when legislators adopted a new state budget in early June — as a 1% surcharge on restaurant food or on “prepared meals.” In other words, someone who purchased a grinder and small soda combination, even at a supermarket, would pay 7.35% sales tax, rather than the base rate of 6.35%.

Yet when DRS released the policy statement this month, it covered a much wider range of prepared foods.

Concerns intensified last Friday when the legislature’s nonpartisan Office of Fiscal Analysis revised its estimate on how much revenue the surcharge would generate.
Based upon the policy statement, OFA projected the tax would generate $158 million over this fiscal year and next — nearly 40% more than lawmakers anticipated. By 2020-21, consumers would pay more than $90 million per year.

The extra penny will come on each dollar spent on a wide array of foods, many of which might not be thought of as a “meal,” critics said.

These items include: popsicles and other frozen treats, doughnuts and bagels, pizza slices, hot dogs, smoothies, power bars, a hot bag of popcorn, and even pre-packaged bags of lettuce and spinach.

The surcharge also applies to beer, fruit juices, milkshakes, hot chocolate, wine, and distilled alcohol like brandy or rum. It even applies to coffee and tea if purchased prepared to drink, rather than as coffee grounds or in tea bags.

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

Max Reiss, communications director for Gov. Ned Lamont, said the administration is reviewing the letter from Senate Democrats.

The administration said many tough choices were made last spring when the governor and legislature approved a new, two-year state budget. That plan averted a projected deficit of more than $3 billion, and did so without increasing state income tax rates.

One Democratic senator who signed the letter, Cathy Osten of Sprague, did not initially recommend any changes to the DRS policy statement when Republican lawmakers objected last week.

Osten, who co-chairs the Appropriations Committee, instead said the GOP opposition was unfair, given that the minority offered no plan to balance state finances last spring.

“I’m still waiting for the Republican budget,” she said. “I feel it is a little bit disingenuous.”

But Republicans said the prepared foods tax was little more than a “money grab” by Lamont and Democratic legislators.

“The governor is not ‘shocked’ by the DRS interpretation, so why are Democrat legislators?” the top Republican in the Senate, Len Fasano of North Haven, said Monday. “It’s their budget, and it is time they own it. Stop blaming others for your mistakes. Show some leadership and convene a special session to right this wrong.”

Fasano called the grocery tax an “embarrassment” and “a clear example of why people don’t trust their Connecticut state government.”

House Democratic leaders have not weighed in yet on the tax hike.

But one rank-and-file Democratic state representative, Liz Linehan of Cheshire, wrote a letter Monday to the Department of Revenue Services, also charging that the department’s interpretation of the surcharge goes beyond legislators’ intentions.

“This unilateral change without the input of taxpayers or the legislature erodes the trust we work so hard to earn,” she said.

5 comments

John ONeill September 18, 2019 at 8:22 am

The following appeared in Nancy’s column Sunday afternoon. Cathy Osten wasn’t the only legislator doing the deflection dance on Sunday

On Sunday, State Senate Majority Leader Bob Duff (D-25) and State Representatives Lucy Dathan (D-142) and Chris Perone (D-137) released this statement:

“The Democratic budget cut taxes for seniors, cut taxes on pensions, cut taxes for businesses, closed a $3.7 billion deficit, and built the largest Rainy Day fund in the state’s history. Locally Norwalk schools will see an increase in state funding and a new grant for the Norwalk High School Robotics Club. The Republicans have failed the residents of this state by proposing no budget, no ideas, nor any solutions of their own. Then they have the gall to be critical. The people of Connecticut deserve an honest and balanced budget proposal from the Republicans in the legislature instead of more politics and showmanship.”
— Dems were caught with the hands in the cookie jar..Like many politicians in current environment, their first reaction is to blame other side without taking accountability. Without public’s reaction, this would’ve slipped thru. It begs the question: How many other taxes have passed that we’re not aware of that would be as absurd as this one
Thank you to websites like Nancy’s for helping us stay informed.

Bryan Meek September 18, 2019 at 10:26 am

Sounds like you have to pass the law to see what’s in it.

The stupid thing is, had they just increased the sales tax from 6.35 to 6.5% they would have raised similar revenues without putting businesses through the burden of updating every single item in their inventories inside of 3 weeks.

The absolute cluelessness on display by Bob Duff and company is extremely disappointing and just another sad example of what we’ve become.

Piberman September 18, 2019 at 10:57 am

Higher taxes on seniors just encourage a larger Exodus from the nation’s only State with a decade long stagnant economy. Voting with “boots” seems the only real vote left in CT.

Rusty Guardrail September 18, 2019 at 12:31 pm

“Meet the new boss…Same as the old boss…”

Taxing food is shameful.

Gov. Lowell Weicker (R) started the income tax, then each successive administration raised it. Both parties share the blame for increased spending + decreased productivity.

John Miller September 18, 2019 at 2:40 pm

Spot on John O’Neill. The first thing that came to mind whe I read this this morning was last week’s phony, finger pointing press release from our local legislative contingent. What I found to be even more ironic was the finger pointing by Sen. Osten. If I’m not mistaken, didn’t she reveal recently that the State wasn’t actually raiding the Special Transportation fund but was actually diverting the fuel tax revenue to cover non-transportation related expenses. Gives one a warm and fuzzy feeling knowing that the co-chair of the Appropriation Committee thinks that it is OK to use the fuel taxes we pay for things other than what they were intended for, doesn’t it!! You are right about NON. Were it not for forums such as this, where the public gets a chance to have a say, it is likely that the rule would have not been challenged.

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