Food fight! The mess made of the 'grocery tax' that wasn't

Gov. Ned Lamont let this one get away from him and as a result Republicans had a field day with the great grocery tax hullabaloo, the minority party playing its role as a check on power to perfection.

This started simply enough during the last legislative session. Newly elected Governor Lamont had made it clear he did not want to see another hike in the income tax, so his fellow Democrats were searching around for other ways to find revenues to close the $3 billion deficit projected over the two-year budget cycle.

Among the solutions, hike the sales tax from 6.35% to 7.35% on prepared meals purchased at restaurants. To make things, ahem, clear, they explicitly placed “grocery stores” into the bill. Since 2002 certain prepared foods purchased at grocers have also been subject to the prepared meals tax (traditional groceries are not taxed), items such as a sandwich or meal slapped together at the deli counter, or prepared soup, or catering services.

The Democrats writing the legislation wanted to make sure the tax collectors didn’t miss hiking the taxes 1% on that stuff, too.

Except, when the folks at the Department of Revenue Services saw “grocery stores” added to the list of taxable prepared food items, their eyes got very big. The rules they issued suddenly included many items, stuff most of us would see as regular grocery products, as taxable. These included doughnuts and bagels, power bars, popsicles and other frozen treats, even pre-packaged bags of lettuce which, we suppose, you could theoretically start gnawing at as you leave the store.

Republicans, it appears, were the first ones to pick up on this. That was a major blunder by the Lamont administration. DRS Commissioner Scott Jackson should have warned the governor that, as his office saw it, the number of grocery items subject to taxation would dramatically increase. Instead Ned heard it from Republicans and from reporters shouting questions.

Would this tax have slipped through if Republicans had not cast a spotlight on it? Perhaps. We suspect the indignation would have led to it being addressed retroactively. The tax hike begins Oct. 1.

However, by sounding the alarm, Republicans did their job as the loyal opposition. And, boy, did they have great fun doing it, howling about their “outrage” over a new “grocery tax” that had been “hidden” from taxpayers.

On Thursday Lamont slowed the bleeding. Jackson said grocers would be advised to raise the tax to 7.35% only on items already subject to the sales tax.

“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,” Jackson said.

In other words, he really stepped into it and was cleaning things up.

The new interpretation does seem to match the intent.

Not wanting to see a good thing end, Republican legislative leaders called for a special session, or action in the next regular session, to clarify the language in the law. Of course, they want Democrats to have to keep talking about this.

But there really is no need. The state has been collecting a sales tax on certain prepared, restaurant-like items purchased at supermarkets for 17 years. Now it will continue to collect the tax, only with a 1% increase. That seems simple enough. It is a wonder that this tax policy change could have become mangled up so badly but, then again, we’re talking politics and government.

 

The Day editorial board meets regularly with political, business and community leaders and convenes weekly to formulate editorial viewpoints. It is composed of President and Publisher Tim Dwyer, Editorial Page Editor Paul Choiniere, Managing Editor Tim Cotter, Staff Writer Julia Bergman and retired deputy managing editor Lisa McGinley. However, only the publisher and editorial page editor are responsible for developing the editorial opinions. The board operates independently from the Day newsroom.

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