Why are five bagels a meal? Grocery tax needs rewrite
They want the money. That’s why Gov. Ned Lamont and Democratic members of the legislature increased the tax on meals in restaurants and applied it to a host of items that most of us think of as groceries. They made a mess, and they sounded the retreat.
Supporters say they did not mean to tax groceries, but the budget initially estimated that the tax would raise more than $110 million in two years. Pizza slices sold in grocery stores alone were never going to raise that hefty chunk of change. The grocery tax that was floated and abandoned last winter appears to be upon us — until Thursday night.
Lamont is struggling with the narrative. The new tax on groceries — now designated as “prepared food” — is an attempt to erase the advantage grocery stores that sell prepared foods have over restaurants, Lamont has claimed. If he were worried about the restaurant business in Connecticut, he would not have singled it out for an increase in the sales tax from 6.35 percent to 7.35 percent. He wanted the money more than he cared about the cost of dining out and its consequences for restaurant owners, workers and patrons.
Elected officials sounded surprised that the officials at the Department of Revenue Services looked at the plain meaning of the words in the legislation passed this spring and provided an interpretation to the businesses that will have to collect the new tax. The language in the budget casts a new, wide net on the definition of prepared foods. Five bagels were a meal, but seven were not. A bag of lettuce was taxed, but a head of lettuce was not.
That so many officials are acting surprised is one of the surprises of this saga. Legislators spend months crafting the budget. The expanded preparedfood tax grab was proposed early this year in a bid to give cities more money. The tax was included in the budget, but the money it raises will be kept by the state. Lamont told WTNH’s Mark Davis that the state needs the money to balance the budget.
A brigade of people scrutinize and shape the budget: legislators, partisan staff members, executive branch officials and nonpartisan legislative budget professionals. They concluded that the grocery tax, as it has become known, would raise tens of millions of
dollars in the next two years, and they were pleased. It was a budget they claimed to be proud to have created.
The governor signed it, and then others had to translate and implement those hundreds of pages of numbers attached to words. Most administrations have people who keep an eye on the birth of a new tax. People within the administration talk to each other to ask questions and offer alerts that the change they enacted is coming. Based on the surprised reaction of the people who created the new tax, that appears not to have happened.
One reason why that may be is that the language of the new tax was clear, and the state employees at the Department of Revenue Services, experienced in creating regulations, may have seen it as one more straightforward task. “This is not what we meant” as a reaction to public uproar should not lead to angry fingers pointing at the state bureaucracy.
Lamont’s budget director Melissa McCaw has offered an alarming explanation of what comes next. “The legislation could have been written with greater specificity,” McCaw said Tuesday, according to The Courant, “and that is what we intend to try and do to make sure what was negotiated in that room is what’s reflected in the policy that was implemented.”
McCaw has signaled that Lamont is about to turn a problem into a crisis. What a handful of officials thought they negotiated in a room away from public scrutiny is of no significance in a society that lives under the rule of law. What matters is what’s written in the budget bill. A change in the interpretation of the tax by DRS, announced Thursday, is not enough. The legislature and the governor made a mistake or miscalculated in their rush to collect as much money as possible to spend $40 billion in the next two years.
The Lamont administration has made this worse by pretending the law does not say what it clearly does. Call the legislature into special session and change the law. Do not leave it to someone who may not have been “in that room” to put a different interpretation on the legislation in a few years and punish Connecticut shoppers who buy a rotisserie chicken or lettuce in a bag. Kevin Rennie is a lawyer and a former Republican state legislator. He can be reached at kfrennie@yahoo.com.