HARTFORD, CT (WFSB) - The governor and the Department of Revenue Service said they're reviewing a new food tax law.
As it stands, prepared foods sold in grocery stores will be subject to the same 7.35 percent tax as restaurants.
Will you steer clear from these items on shopping trips after Oct. 1?
Starting Oct. 1, shoppers will potentially be paying more at the grocery store. The restaurant tax is going from 6.35 percent to 7.35 percent, which impacts many prepared foods, bakery items, and more.
Will you avoid the taxed items? Vote in our poll here.
Gov. Ned Lamont and the DRS said they understood that the law caused confusion among shoppers, store owners and lawmakers as to what will get taxed.
Tuesday, however, Lamont said the DRS was "overreaching" and told it to make changes soon.
"We knew exactly what was intended. DRS interpreted it more broadly than that. I think the legislatures had their thoughts as well, and we will be able to come back with clarity soon," Lamont said.
The meals tax was part of the governor's budget to raise about $100 million over two years. The intent was to tax prepared foods, meaning meals for immediate consumption.
"They saw the word grocery stores in there and they thought that meant a certain interpretation, which was not the interpretation OPM nor the legislature had and we are going to rectify that," Lamont said.
“The budget passed by the General Assembly and signed by the governor was balanced, on time and did not include an increase to the income tax, despite facing a $3.7 billion deficit," said Max Reiss, the governor's spokesperson. "The budget provided needed funds for municipal aid, education and workforce development programs. Republicans were united against all of these and more – but, it’s not entirely clear what they are for because they didn’t bother to submit a budget. That being said, the budget must be enacted in the spirit in which it was passed. To that end, Gov. Lamont has instructed his [Office of Policy and Management] secretary and DRS commissioner to review DRS’ interpretation of this law, and to do it in short order.”
The tax on prepared foods like salad bars and hot buffets was one thing, but when the revised plan called for taxing bags of lettuce and five or less bagels, that created a backlash.
"It was very clear in the bill and it was very clear in the debate. 'Will you tax this item, will you tax this item? Yes, yes, yes.' And now the people are upset and citizens of Connecticut are saying, 'what are you doing'," said Senator Keven Witkos.
The current tax supposedly applies to items such as sandwiches, salad mix in bags under 5 ounces, and rolls in quantities of five or fewer.
The tax is also causing confusion for local stores.
"We have to wait until the state decides what they want to tax and how much they want to tax, and then we are going to have to scramble to implement it," said Chris Romeo, of Westside Market in Rocky Hill.
The Senate Republican leader, Sen. Len Fasano of North Haven, said Democrats blamed the DRS for the broad reach of the new food taxes.
He released a statement on Tuesday morning.
“Connecticut Democrats cannot own up to their mistakes," Fasano said. "It’s absurd that Democrats are blaming a commissioner whose job is to enforce the law that they wrote. The DRS commissioner isn’t the one who wants to tax people on their groceries. He is doing his job and reading the law that Democrats drafted and passed. For Democrat lawmakers, and now the governor in yet another flip-flop, to lay blame on the DRS commissioner and ask him to ignore the very language that they wrote is absurd. What good is any law if it can simply be ignored by request of a legislator?"
Fasano said Democrats need to go into a special session to change the grocery tax.
The plan from the DRS was counting on nearly twice as much revenue. The governor says they're going to scale it back, but the new tax on meals is supposed to take place in two weeks.
The question now is if lawmakers can make revisions and get an agreement in just a matter of days.
Democrat Jason Rojas, a Finance Committee chair, has already started going over papers to clarify what should be taxed and what shouldn't.
"It's an expanded definition to taxable meals beyond what was intended and I think the primary point of confusion or what's causing confusion is the introduction of the word grocery," Rojas said.
Folks are also wondering how the meal tax will impact WIC recipients. WIC provides food assistance for women who are pregnant or breastfeeding, and for infants and children, however WIC purchases are exempt from sales tax and the approved list includes only nontaxable foods.
Jason Jakubowski, CEO of Foodshare, said a meal tax on items at a grocery store could limit what WIC recipients can buy.
“Our concern for our clients out there is that if this does go into effect, it'll limit the number of things they are allowed to purchase. The residual effect is also that they will have less purchasing power to be able to purchase the types of things that they need and that we encourage,” Jakubowski said.
As it stands right now, taxable meals would include:
- All food and beverages sold for human consumption at the seller’s location; and
- Food products ordinarily sold in such form and portions that are ready for immediate consumption at or near the location of the seller. This includes prepared foods, prepackaged foods, hot foods, and foods heated on the premises for the purchaser.
- A meal may be a full dinner or it may be a single item. Meals are subject to sales and use taxes whether they are served at the location of the seller, delivered to the purchaser’s location, or sold on a takeout basis.
Examples of Taxable Meals: Food for immediate consumption constituting taxable meals includes, but is not limited to:
- Sandwiches, grinders, and wraps
- Popsicles, ice cream cones, cups, sundaes, and other individual servings of frozen desserts unless sold in factory prepackaged multi-unit packs
- Ice cream, frozen yogurt, and other frozen desserts sold in containers of less than one pint
- Salads sold at salad bars
- Lettuce or greens-based salads sold in containers of 8 ounces or less
- Salads that are not greens-based (macaroni, potato, pasta, fruit, etc.) sold in containers of 8 ounces or less
- Donuts, muffins, rolls, bagels, and pastries (5 or fewer)
- Cookies sold loose (5 or fewer when cookies are sold by quantity, or less than 8 ounces when cookies are sold by weight)
- Pies or cakes by the slice
- Prepackaged or factory-sealed bags or packages of 5 ounces or less of chips, popcorn, kettle corn, nuts, trail mix, crackers, cookies, snack cakes, or other snack foods, unless sold in factory prepackaged multi-unit packs
- Pizza, whole or by the slice
- Cooked chicken sold by the piece, including buckets of chicken, and whole cooked chickens
- Cooked ribs sold by the piece or portion and whole racks of ribs
- Hot dogs served on a bun or heated
- Bagels that are individually prepared
- Soup sold in containers of 8 ounces or less, unless sold in factory prepackaged units
- Meal replacement bars
- All beverages provided with the sale of a taxable meal
- Food sold at a hot buffet
- Food that is cooked to order
- Popcorn, kettle corn, nuts and any other snack foods that are kept warm for purchase
- Items such as salads, side dishes, and rolls, when sold as part of family pack meals typically including, whole chickens or buckets of chicken, when prepared and sold for immediate consumption, even when the items exceed the weight or quantity limits specified above.
- Beer, including nonalcoholic beer
- Fruit juices, sweetened beverages, soft drinks, and soda
- Carbonated water
- Coffee or tea (ready to consume, hot or iced)
- Distilled alcohol such as brandy, rum, whiskey, gin, vodka, and tequila
- Fountain drinks of any kind
- Hard cider
- Kombucha tea, and other naturally carbonated beverages
- Malt liquor
- Hot chocolate
- Syrup-flavored crushed ice drinks
Read the full policy statement here.