A proposed bill would levy a twenty-eight cent tax against delivery services like DoorDash and GrubHub, with the potential for the fee to increase annually.
The bill would impose the tax on “retail deliveries,” defined as “a retail sale of tangible personal property by a retailer for delivery by a motor vehicle to the purchaser at a location in this state, which sale includes at least one item of tangible personal property” that is subject to sales and use taxes. The bill directs retailers to add the tax to charge consumers and to identify it as a “retail delivery fee” to be listed separately from other charges.
If the bill becomes law, it would go into effect on October 1.
The tax would be annually adjusted by the Connecticut Department of Revenue Services in accordance with the consumer price index.
Retailers would be required to file quarterly returns with DRS to pay the tax. Money collected through the tax would be deposited in the Special Transportation Fund.
The bill would also tax peer-to-peer car sharing services like Turo when cars are rented for less than 30 days. A tax for renting and leasing motor vehicles for longer periods already exists.
Testimony on the bill during a March 10 public hearing was overwhelmingly in opposition and included groups like the Connecticut Business and Industry Association (CBIA), the Connecticut Restaurant Association, the Greater New Haven Green Fund, Turo, and the Chamber of Progress.
“Data shows that Connecticut is ranked near the bottom when it comes to the cost of doing business and starting a business. This bill would impact thousands of businesses and ultimately the consumers. Delivery taxes are inherently regressive and often have the most negative impact on those who can least afford to incur the cost of an additional fee, whether that be a business or consumer.” CBIA wrote in testimony opposing the section of the bill that imposes the tax.
The Connecticut Restaurant Association argued that that a tax on food deliveries would make local restaurants less competitive.
“For small restaurants, delivery services are a lifeline, especially during off-peak hours or slower seasons. Any extra financial burden imposed on their customers could force many to reduce or even eliminate their delivery options, depriving customers of a service they have come to rely on.” the group wrote in testimony.
The Greater New Haven Green Fund submitted testimony opposing the tax on peer-to-peer car sharing, citing data showing that those services can reduce congestion, parking demand, and vehicle miles traveled by 50 percent.
Turo also testified against the bill.
“This legislation imposes a 3% tax increase on CT residents. This legislation burdens Connecticut residents who use peer-to-peer car sharing services, by increasing taxes on them, all while they are struggling with high costs and the cost-of-living crisis. Tax increases like these are burdensome on some of the most vulnerable populations.” the company wrote.
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