Senate President Pro Tem Martin M. Looney, D-Haven (foreground) and Senate Majority Leader Bob Duff, D-Norwalk (background) Keith M. Phaneuf / CTMirror.org file photo

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 legislsture’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.

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Keith M. PhaneufState Budget Reporter

Keith has spent most of his 31 years as a reporter specializing in state government finances, analyzing such topics as income tax equity, waste in government and the complex funding systems behind Connecticut’s transportation and social services networks. He has been the state finances reporter at CT Mirror since it launched in 2010. Prior to joining CT Mirror Keith was State Capitol bureau chief for The Journal Inquirer of Manchester, a reporter for the Day of New London, and a former contributing writer to The New York Times. Keith is a graduate of and a former journalism instructor at the University of Connecticut.

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11 Comments

  1. A sneaky and shameful backdoor grocery tax being imposed on an already overtaxed citizenry. When is enough, enough?
    Many of these grocery items will go from zero percent tax to 7.35 percent tax.
    Brought to you by the same people who want us to trust them with toll revenue…

  2. This was in the budget the Democrats voted for. Their circus, their monkey. Osten was on Ray Dunaway’s show this morning back pedaling like crazy to distance the caucus from this. Talk about spineless. The Governor wanted a grocery tax and now he has one.

    1. This CT Democrat effort reminds me of their attempt to ‘disown’ the total bailout of Hartford. They knew very well what would happen and, if they truly didn’t, they are even more incompetent than we already give them ‘credit’ for and should resign immediately.

  3. As a Senior citizen – we purchase and eat a lot of prepared food – Shame on Lamont and his minions for enacting this Bill – The Democrats proposed this Bill and knew what was in it – They own this fiasco and only have themselves to blame for this debacle

  4. It would be helpful to see a list of what’s already taxable in a grocery store. It’s not clear in this story which items are taxable under current interpretation and would remain taxable at 7.35 percent.

  5. First and foremost, this is not a 1% tax increase. If the previous base sales tax was 6.35%, an increase to 7.35%, is an increase of 15.75% to the base sales tax rate. Additionally, it is a 7.35% base sales tax on many convenience food items, that did not previously exist. One more thing, these small quantities of convenience foods, hit single and childless millennials directly in the pocket. No wonder they are running away from this state.

  6. The party of the little people once again proved that they aren’t. This is another regressive tax that hits the poor and middle class disproportionately.

    The Democrat quest is unending to find new tax revenue to support the nouveau riche in Connecticut- retired state workers. For the other 3.4 million of us, its business as usual.

  7. Re: “The administration said many tough choices were made last spring …” 

    No, they didn’t. No significant spending cuts were made, and no reforms implemented that might have reduced spending in the future. Rather than having made “‘tough’ choices,” they took the easy path of tax increases, such as this. 

  8. Ah, yes, that good ol’ “law of unintended consequences”. Rings just as hollow as “we are only eliminating the death penalty on future crimes, not those guys already on death row”.

  9. The dems knew it. They are now just mad we found out the truth. I’ll actually give Lamont admin for being transparent about the truth. First the bail out of Hartford and now this. At what point do the voters realise the dems are just takers. And I’m no Republican by any means but to the voters of CT. When do you realise what is happening. I was the first person who said I’d never leave the North but it’s out of control now

  10. “This interpretation goes against the legislative intent of the new law.”

    Well, perhaps you should have written a better bill that actually spelled out the intent.

    If the full extent of DRS’s interpretation had not been publicized and the taxation began, not word one would have come out of the Dem’s mouths. Until the citizens discovered what had happened. Would they have rolled-back on the extent at that time? I have my doubts.

    As someone whose parents ran a general store beginning back in the 1960s, the application of CT sales tax on some foodstuffs was difficult to comprehend even then. Soda was taxable. Fruit drinks were taxable but fruit juice was not. If it wasn’t edible it was taxable.

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