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Issue Date: Vol. 51, No. 3, March 2011, Posted On: 2/18/2011

Malloy's Budget Maintains Connecticut's Vending Tax Exemption

Emily Jed
Connecticut Vending Association, CVA, Connecticut vending machine tax exemption, vending machine, vending machine operator, vending product tax, Gov. Dannel P. Malloy, vending machine foods, Gov. Dannel P. Malloy, Mark Lathrop, Lathrop Vending, Uncasville CT, Eric Mueller, United Snack Group, Cheshire CT, Sen. Eileen Daily (D-Westbrook), Rep. Patricia Widlitz (D-Guilford)

HARTFORD, CT -- Connecticut's vending operators breathed a collective sigh of relief on Feb. 16 when Gov. Dannel Malloy unveiled a two-year budget plan that maintains the industry's existing tax exemption.

The governor's plan, which hikes taxes and cuts spending to close the state's $3.2 billion deficit, includes a$17.9 billion budget for the coming fiscal year, beginning July 1, and increases spending to $18.4 billion in 2013.
With the budget plan looming, the vending machine business is one of many industries in Connecticut that has been striving to maintain its current sales tax exemption. The Connecticut Vending Association met in January with state lawmakers to emphasize the industry's sizable contribution to the economy and the hardship higher taxes would impose. | SEE STORY

"I'm thankful the governor recognized that our tax exemption will help our industry survive," said CVA president Mark Lathrop, Lathrop Vending (Uncasville). "I would like to thank our board members for their dedication and hard work to save this exemption."

CVA legislative director Eric Mueller, United Snack Group (Cheshire), added, "That our exemption has survived this intense scrutiny proves it achieves its end result, which is the many jobs with benefits our industry provides. Nevertheless, we are thankful that our governor has recognized our value."

The governor outlined during his election campaign last year, and recently reiterated, that before considering tax increases, he will first look to repeal tax breaks and incentives. The resulting revenues, he emphasized, would reduce the need to raise money from other sources, such as income, sales and corporate taxes.

The Nutmeg State exempted from sales and use taxes certain food products, and foods assembled as meals, sold through coin-operated vending machines on July 1, 1997. Off the hook are sandwiches, canned foods, salty snacks, granola and cereal bars, bakery goods, dairy items and fruit (canned, dried or individual pieces), along with coffee, tea, cocoa, fruit juices, and mineral water and other noncarbonated, nonalcoholic drinks. Nonprescription medicines are also exempt.

Not exempt are candy and confectionery goods, including chocolate and chewing gum; candy-coated items like nuts, raisins, popcorn, cereal bars and granola bars; soda and other carbonated beverages; cigarette and tobacco products; and items not intended for human consumption. Additionally, effective July 1, 2000, all vended items 50¢ or less are exempt from sales tax.

On Jan. 31, Lathrop and Mueller met with state Finance Committee chairs Sen. Eileen Daily (D-Westbrook) and Rep. Patricia Widlitz (D-Guilford) to inform them of the industry's substantial contributions, including employment. CVA estimates that Connecticut's vending industry employs 3,650 people, with a payroll of $14 million, and generates $67 million in annual sales. "We emphasized that the exemption clearly works, based on the ratio of payroll to gross sales," Mueller told VT.

In addition to urging lawmakers to maintain the existing sales and use tax exemption enacted in 1997, Lathrop and Mueller asked that they consider matching the Massachusetts exemption of all vended product sold for $3.50 and under, which would adjust Connecticut's current 50¢ exemption for inflation.

"Sen. Daily and Rep. Widlitz were extremely attentive and eager to learn about our industry," Mueller reported. "Both of the Finance Committee chairs were genuinely concerned about our small businesses and the jobs that we provide."

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