HARTFORD, CT — It’s not even an actual proposal yet, but House Minority Leader Themis Klarides said applying a sales tax to groceries and medicine is a non-starter for her and House Republicans.
She said lawmakers phones have been ringing off the hook since the news of the idea first broke on Monday.
The idea, which was sort of a trial balloon floated by Gov. Ned Lamont’s office, could raise revenues to help close a $1.5 billion budget deficit next year and $2.3 billion the following year.
With a 6.35 percent sales tax, Connecticut doesn’t collect about $444.7 million in sales tax on “food products for human consumption” and $391 million for prescription medication, according to the Department of Revenue Services.
“The only proposals we’ve seen so far this year are proposals that are trying to bring more revenue into the state and none that are trying to save money,” Klarides said Tuesday outside her office.
Klarides called the sales tax trial balloon “very ill-directed.”
The Commission on Fiscal Stability and Economic Growth recommended eliminating about 14 percent of the many sales tax exemptions on Connecticut’s books in order to produce an additional $750 million per year in revenue. They also called for increasing the sales tax from 6.35 percent to 7.25 percent to help make up the revenue they would have lost if there was a reduction in the personal income tax.
On the campaign trail, Lamont promised to maintain the current income tax rates, but he proposed increasing the property tax credit for lower and middle class homeowners and renters.
Lamont’s first budget proposal isn’t due until Feb. 20, so it’s still unclear exactly what he will propose in terms of revenue and spending. Then the legislature’s two budget writing committees have until the first week in May to finalize their own budget proposals.
There have been proposals by lawmakers this year to eliminate the sales and use tax on certain items.
One bill would exempt residential wheelchair ramps, another would exempt smoke detectors and carbon monoxide detectors, and two others would exempt all aircraft from sales and use taxes, including HB 5257 and SB 115. Further, two other bills would provide exemptions from sales and use taxes on breastfeeding supplies and clothing and footwear priced under $75.
The sales tax exemptions have been used as both a carrot and a stick by lawmakers over the years.
Former Gov. Dannel P. Malloy and the Democrat-controlled legislature eliminated the sales tax exemption for some products and services such as yoga classes and yarn in 2011.
In 2012, Malloy issued an executive order to create a task force to further study the state’s tax exemptions and expenditures, but not much has happened since.
The task force submitted a final report to the governor on Sept. 27, 2012.
It wasn’t until July 1, 2018, that tampons and baby diapers were exempted from the sales tax.
The tax on tampons and sanitary pads brought in about $3.6 million a year. The tax on diapers brought in about $4.3 million a year.
The Office of Fiscal Analysis produced this report in 2014 detailing about $7 billion in tax exemptions, where they came from, and how much they are being used.