Lamont rescinds prepared foods tax
Republicans seek to force special session on controversial measure
HARTFORD — Under pressure from legislators and consumers, Gov. Ned Lamont’s administration rescinded its policy guidance Thursday night on the highly controversial tax on prepared foods at grocery stores.
The state’s tax commissioner, Scott D. Jackson, under pressure from Lamont, withdrew his original guidance from last week and announced that no new food items would be taxed.
Jackson, the former mayor of Hamden, wrote that “when the entire statute is read as a whole, it becomes clearer that the General Assembly did not expand the applicability of the tax, but simply increased the existing tax.”
The current sales tax of 6.35% on meals in restaurants will now increase to 7.35% on Oct. 1. In the same way, prepared food items that are currently taxable in grocery stores will be taxed at 7.35%. The administration says that taxable items include “catering services performed by a supermarket’’ and “sales of sandwiches, grinders, coffee or tea prepared in a supermarket at a delicatessen counter or elsewhere for takeout.”
In addition, the tax is charged on “sales of meals in areas of a supermarket where food is intended to be consumed in the supermarket, such as at snack bars or food courts. The meals sold in these designated eating areas are taxable even if taken off the premises by the purchaser.”
The issue created a firestorm over the past week as the tax department originally called for increasing the number of items that could be taxed because the
legislature had inserted the words “grocery store” into the law.
The tax department, for example, initially said that pizza slices, hot dogs served on a bun, meal replacement bars, smoothies, ice cream cones, and other items should be taxable. But on Thursday, the five-page policy statement by the Department of Revenue Services was dropped.
“The original guidance created by DRS was too broadly interpreted and not reflective of what was intended when the budget was passed,” Lamont said Thursday night. “Businesses and residents depend on the guidance from these policy statements to better understand the real-world impact of legislation, and the update provided today gives a more accurate indication of how the statute on prepared foods should be applied. I felt it important to act swiftly, but thoughtfully and thoroughly to ensure that what was enacted was implemented.”
Lamont had been caught off-guard over the food tax and told reporters this week that he had not received any advance warning from the tax department that officials would be releasing a highly detailed, new interpretation of the tax law.
Regardless of any policy statement by the tax department, Republicans said Thursday that the issue is still not resolved until the law itself is changed.
“The only way to eliminate the broadening of the tax by future commissioners, governors or legislatures is to change the statute through legislation,” Senate Republican leader Len Fasano wrote to Jackson. “Clearly, the governor and Democrat leaders will not call a special session to change the statute at this time. A change is still needed in the future to remove “grocery store” from the law. As a result, any revised guidance you issue will be a temporary agreement, but a true fix can only be achieved when the legislature changes the language of the law.”
Based on that position, House Republicans submitted 54 signatures Thursday in their attempt to force a special session on the prepared foods tax. Rep. John Frey of Ridgefield hand-delivered the petitions to the Secretary of the State’s office at the state Capitol as reporters watched. Republicans also will be submitting six additional signatures for their caucus members who were out of town and unable to sign the original round of petitions.
But lawmakers said the chances of forcing a special session are difficult because Democrats control the House by 91 to 60 and the Senate by 22 to 14. Forcing a special session requires 76 signatures in the House and 19 in the Senate. No Democrats had signed the petitions as of Thursday.
“They’re certainly aware of what’s going on, and we welcome them to join the parade,” Frey said.
House Speaker Joe Aresimowicz declared victory Thursday night, thanking Lamont and his Democratic colleagues for remaining united in enforcing the law as they originally intended.
Republicans emphasized that the two most important words that were added to the state law were “grocery store,” which has led to confusion over the past week.
Under the current system, certain prepared foods sold at grocery stores are tax-free — even though the same items are taxed if they are purchased in restaurants. The tax is imposed on meals sold in a supermarket snack bar or food court, along with sandwiches, grinders, coffee or tea prepared at the supermarket.
The tax department originally listed more than 20 different categories of “taxable meals” — an important designation that included popcorn, kettle corn “and any other snack foods that are kept warm for purchase.”
The definition of “eating establishments” that would be required to charge the tax covered a wide variety of outlets, including hot dog carts, convenience stores, food trucks, fast-food restaurants, ice cream trucks, street vendors, and coffee shops that operate as part of another business.
The state legislature passed a law in June that said meals and certain beverages will be charged the higher rate on Oct. 1. The total tax increase on food items would be more than $100 million over two years for the state. The tax department’s guidance is highly specific in certain areas.
“Whole cooked chickens, whole racks of ribs, or trays of pasta, when sold by eating establishments or caterers, are considered food items for immediate consumption and are subject to sales and use taxes,” the department said.