Tax On Groceries, Medication Considered By Lamont

HARTFORD, CT — Gov. Ned Lamont is considering adding the sales tax to some exempted items including groceries and medications. Lamont’s administration has been considering ways to reduce the sales tax rate that is currently 6.35 percent and one way is by taxing more items.

It isn’t the first time ending certain exemptions has come up. The Connecticut Commission on Fiscal Stability and Economic Growth recommended ending many of the exemptions. The commission also argued that state taxes should be increased while income taxes are decreased in a revenue-neutral swap.

The grocery sales tax exemption is one of the most common throughout the country with 38 states either forgoing the tax completely or offering a reduced rate, according to the Tax Foundation. Generally, a tax is still applied to non-essential items such as candy bars and soda, but doesn’t touch staple items like bread and milk. However, the tax can become a complicated smorgasboard where a rotisserie chicken that is warmed at the store is taxable, but one that has been cooked and packaged isn’t taxed.

A report by the state Office of Fiscal Analysis estimated that taxing groceries could bring in about $450 million per year for the state. Taxing prescription medication, syringes and needles could bring in around $405 million per year.

The new governor will have to contend with a $1.5 billion budget gap for the next fiscal year. He has previously said that he doesn’t want to use money from the state’s rainy day fund to close the gap and instead wants to do so through lasting structural budget changes. For several years state legislators and the governor’s office have had to scramble to find ways to close the deficit. Lamont is hoping to make the budget deficit a thing of the past going forward.

Lamont could run into some issues trying to encourage the state legislature to enact a new tax, according to the CT Mirror. Moving to increase the minimum wage to $15 could help mitigate the new cost to the state’s lowest paid workers.

Senate Minority Leader Len Fasano (R-North Haven) said that he would have to see Lamont’s full budget plan to see if the mix of changes would help economic growth.

Connecticut’s sale tax rank is higher than the average of 5.1 percent and five states have no sales tax whatsoever.

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