HARTFORD, CT — It took a few days, but Gov. Ned Lamont and Democratic legislative leaders are questioning the state Department of Revenue Services’ guidance on the new meals tax.
Senate President Martin Looney, D-New Haven, and the entire Democratic caucus wrote a letter to DRS Commissioner Scott Jackson to tell him they “were shocked to see that DRS has somehow interpreted the language in the budget (PA. 19-117) to significantly broaden the base on what meals and beverages would be covered by the sales tax.”
The DRS guidance says the higher 7.35% sales tax will apply on Oct. 1 to things sold in grocery stores such as rotisserie chickens, “lettuce or greens-based salads sold in containers of 8 ounces or less,” “hot dogs served on a bun or heated,” and fewer than five donuts, muffins, rolls, bagels, and pastries, to name a few.
House Speaker Joe Aresimowicz also wrote to Jackson to urge him to review the guidance his department issued.
“The unilateral decision by the agency to expand the sales tax to additional food items is not consistent with the intent of the budget,” Aresimowicz said.
The meals tax, according to lawmakers, was supposed to apply to food sold at restaurants, but the word “grocery” was added to the definition at some point before the budget was approved.
A preliminary analysis by the nonpartisan Office of Fiscal Analysis found the meals tax, as it’s been interpreted by DRS, will generate significant revenue beyond what was projected to be collected as part of the budget. If the state followed the DRS guidance and taxed certain groceries that are currently tax exempt, it would increase revenues by $18.8 million in 2020 and $25 million in 2021.
“We do not need the revenue that is expected to be generated by this proposal in this biennium,” Aresimowicz and House Majority Leader Matt Ritter wrote Monday.
The Department of Revenue Services said they have received the letters and will respond.
On Monday, just a few days after Republican lawmakers pointed out the increase in several popular grocery store items as part of a new 1% meals tax, Max Reiss, Lamont’s communications director, said the governor has instructed his Office of Policy and Management Secretary and Department of Revenue Services Commissioner to “review DRS’ interpretation of this law, and to do it in short order.”
Meanwhile, Republican lawmakers say Democrats added the word “grocery” to the definition of the meals tax and then passed the budget without any Republican input.
Senate Republican Leader Len Fasano, R-North Haven, called it an “embarrassment.”
“If Democrats are so ‘shocked’ about the state’s interpretation of the policy they voted ‘yes’ on, then they need to clean up their mess in a Special Session,” Fasano said.” They made the mess by voting ‘yes’ on the state budget. They created the confusion and the public uproar. Now, amazingly, they are ‘shocked’ and trying to blame the state tax department for their damaging policies.”
House Minority Leader Themis Klarides, R-Derby, said Democrats can’t be shocked by a budget they passed and approved without Republican input.
“I’ve never seen a group of people elected to do a job so surprised by everything they did,” Klarides said. “As soon as the public doesn’t like it then they don’t know about it.”
She also pointed out that Jackson was nominated by Lamont to the position.