Is CT’s sales tax holiday real relief — or just a gimmick?

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By Keith M. Phaneuf © The Connecticut Mirror

In one week, Connecticut will offer back-to-school shoppers another opportunity to buy clothing and footwear sales-tax-free, savings millions of dollars in total.

But these sales tax holidays available this year in 19 states are too limited to provide any meaningful tax reform, with wealthier households generally benefitting the most, according to a new analysis from a progressive policy group.

While politicians often turn to these flashy promotions because of their popularity, the Washington, D.C.-based Institute on Taxation and Economic Policy says states could provide far more direct relief to low- and middle-income families through income tax credits.

“Sales tax holidays are poorly targeted and too temporary to meaningfully change the regressive nature of a state’s tax system,” wrote Marco Guzman, a senior policy analyst with ITEP. “Lawmakers must understand that they cannot resolve the unfairness of sales taxes simply by offering a short break from paying these taxes.”

Tax relief doesn’t always reach those most in need

Connecticut’s sales-tax-free week will run from Aug. 20 through Aug. 26, waiving the standard 6.35% sales tax charge on clothing and footwear items costing less than $100.

It marks the 23rd promotion since the state first launched the program in 2000.

In recent years, these Connecticut holidays have saved consumers between $5 million and $6 million per year. And some of that savings goes to consumers from neighboring states who cross the border to take advantage of the Connecticut holiday.

And the ITEP analysis also noted that “Wealthier taxpayers are often best positioned to benefit from a temporary exemption since they have more flexibility to shift the timing of their purchases to take advantage of the tax break an option that isn’t available to families living paycheck to paycheck.”

Guzman cited a 2010 study by the Federal Reserve Bank of Chicago that surveyed households in three income ranges: less than $30,000; $30,000 to $70,000; and greater than $70,000.

It found households across all ranges, on average, increased their clothing-item purchases by 49% during sales tax holidays, while those in the top group increased by 136%.

The sales tax rate in Con- necticut and in most states is regressive, meaning the rate doesn’t rise or fall proportional to the purchaser’s income or wealth.

Not surprisingly, the ITEP analysis found, most of the relief goes to consumers who can afford to spend more.

And since the coronavirus pandemic and the 40-yearhigh in inflation reached in mid-2022, Guzman told the CT Mirror, it’s not just poor families that often aren’t financially ready to buy when the sales-tax-free week arrives.

“Middle income [households] can be living paycheck to paycheck,” he said.

Sales tax holidays are popular with politicians

A second problem, Guzman noted, is that the actual relief from a sales tax holiday is not substantial.

A family spending $300 on clothing and footwear in

Connecticut later this month would save $19.05 thanks to the holiday.

That savings is paltry considering the gap between the federal poverty level and at least one assessment of Connecticut’s high cost of living.

177,243 students for free breakfast. For lunches, the state estimates that 128 districts are eligible for funding to serve 13,197 qualifying students who will now receive free rather than reduced-fee meals.

“We have to make sure kids are ready to learn, and that starts first thing in the day, a good meal, a good breakfast, no stigma,” Lamont said at the press conference.

In Connecticut, nearly 400,000 people are food insecure. This number includes 90,000 children, according to Connecticut Foodshare, a food bank which works to feed individuals and families across the state.

“People often think there’s no problem with hunger in Connecticut,” President and CEO of Connecticut Foodshare Jason Jakubowski said. “That’s 100% not true. We serve the whole state, all 169 towns. There is at least one food insecure family in each one, no matter whether it’s an urban city, the wealthy suburbs, or a rural town.”

Free meals in local schools

In Southington, the state’s expanded program provides a continuation of services the district offered through School Meals Assistance Revenue for Transition (SMART) funds last spring after the pandemic-era program expired. Southington’s School Nutrition Director Nya Welinsky said the district has run a breakfast program for years. However, with the state’s changes, Southington Public Schools will now be able to offer breakfast for every student.

“Seeing how many more students participate when it’s free for all makes you see that there’s a real need and want for this program,” Welinsky said.

District staff in Wallingford must act quickly to have free breakfasts available to all students by the time school begins on Aug. 31. The town has an 8.7% food insecurity rate, according to Connecticut Foodshare.

“It is unfortunate that the State and Federal Government did not announce this sooner, as we now need to go back and alter all plans, documents, and parent info,” Food Service Director Jim Bondi said. “We will have information on Wallingford's school breakfast and lunch program going out to all parents as soon as we can.”

In Meriden, the state’s announcement creates no changes to the district’s current operations. Designated a Community Eligibility Provision (CEP) district under the USDA, Meriden has a 12.9% food insecurity rate. The district has offered free breakfast and lunch to all students since 2017.

Director of Meriden’s Food and Nutrition Services Susan Maffe said that last year, free breakfast had a 50% participation rate among students, with an 85% participation rate for free lunch.

“Eating school breakfast has been associated with so many positive things such as better attendance, increased attention spans, and fewer visits to the nurse’s office with problems such as headaches or stomach aches,” Maffe added.

The free meals in Meriden’s schools follow USDA standards and contain whole grain, low sodium, and reduced fat foods. Per Maffe, the expansion of the state’s program presents an opportunity to reach more students.

“Childhood hunger exists a kid may not look hungry, but that doesn’t mean they aren’t,” Maffe said. “Sometimes a family may also just not have the resources to feed them healthy food.”

Cheshire’s Food Services Director Erica Biagetti explained that the state’s expanded program builds on the federally and state-supported free and reducedprice meal program that Cheshire has previously offered. She views the state’s expansion of the free meals program as a show of support for its students.

“I see this program as a step towards being able to hopefully be able to offer meals (breakfast and lunch) to all students at no cost,” Biagetti said. “It will help to relieve any stigma and reassure students that if they need a meal then can access food at school without any worry of the income status.”

Fighting food insecurity

Making free meals accessible for all students helps level the playing field, and Welinsky has seen firsthand the impact this can have on students.

“There’s a feeling of equity that the students have mentioned to me,” Welinsky said. “It’s more equitable, and it’s a wonderful way to start the day well-nourished.”

For families experiencing financial strain, Welinsky emphasized the importance of the free and reduced-price meal application. She will hand out applications and answer questions at the Southington Farmers Market on Friday, Aug. 18 from 3 to 6 p.m. and said people can also access the form online.

“It’s more than a meal application in many ways,” Welinsky said. “We really encourage families to fill it out. With the information they provide, families can end up receiving fee waivers for different things in schools.”

None of this would be possible without the support of the legislature to help get kids the food they need, Jakubowski explained.

“We’re lucky here in Connecticut that our delegate to the legislature is very supportive of programs that help kids get the food they need,” Jakubowski said. “It’s a big leap in the right direction. We’re hopeful that in the next year or two we will see universal free lunches in Connecticut.”

Jakubowski added that he hopes future federal action

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