The Middletown Press (Middletown, CT)
Dems: Tax officials inflated prepared foods levy
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, DNew 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 36member 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 percent 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 percent sales tax, rather than the base rate of 6.35 percent.
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 percent more than lawmakers anticipated.