The state Department of Revenue Services (DRS) has released a revised plan for the meals tax set to go into effect next month.
The new law, set to go into effect on October 1, was meant to increase the sales and use tax rate on certain prepared foods and beverages. The tax would increase 1 percent, bringing the tax rate to 7.35 percent.
When DRS previously revealed the list of what will be affected Republican lawmakers raised concerns about which items would be taxed at the higher rate. Items on the list included salad, macaroni salad and soup in containers that are 8 ounces or smaller, rotisserie chickens, and rolls and bagels when you buy five or less.
Republicans argued the tax will also target items most people consider groceries that should be tax-free and blasted the plan to also apply the roughly 7 percent tax to meal replacement bars, individual frozen desserts and snack bags weighing less than five ounces.
The governor called for DRS to review its interpretation and in a letter released Thursday the department’s commissioner released a new list of items.
"The original guidance created by DRS was too broadly interpreted and not reflective of what was intended when the budget was passed. Businesses and residents depend on the guidance from these policy statements to better understand the real-world impact of legislation, and the update provided today gives a more accurate indication of how the statute on prepared foods should be applied,” Gov. Ned Lamont wrote in a statement. “I felt it important to act swiftly, but thoughtfully and thoroughly to ensure that what was enacted was implemented.”
“The DRS initially interpreted the 2019 legislation to add certain circumstances where the tax would be applied. However, 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.”
But Republicans think this is just a temporary fix.
Senator Len Fasano (R - North Haven) said even with the rollback there are still lots of questions about how the tax will be implemented and it could be applied differently in the future.
“This isn’t the way statutory construction is supposed to work. You’re supposed to write the law and the law speaks for itself," Fasano said.
The senator believes it’s legislators who need to tweak the law to make it clearer. He also thinks the state needs to formally assure grocery stores they won’t be held liable for any issues with how the tax is implemented.
See the full letter and the revised list ofaffected items below.