OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http://www.cga.ct.gov/ofa

sHB-5137

AN ACT EXEMPTING DISPOSABLE OR REUSABLE DIAPERS FROM THE SALES TAX.

OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 17 $

FY 18 $

Department of Revenue Services

GF - Revenue Loss

2.8 million

3.5 million

Department of Revenue Services

TF - Revenue Loss

190,000

330,000

Policy & Mgmt., Off.

MRSA - Revenue Loss

160,000

330,000

Note: GF=General Fund; TF=Transportation Fund; MRSA=Municipal Revenue Sharing Account

Municipal Impact: None

Explanation

The bill results in a revenue loss to the state of $3.2 million in FY 17 and $4.2 million annually thereafter by exempting sales of disposable or reusable children's diapers from the sales and use tax.

The bill would specifically result in a revenue loss of: (1) $2.8 million in FY 17 and $3.5 million annually thereafter to the General Fund; (2) $190,000 in FY 17 and $330,000 annually thereafter to Special Transportation Fund and; (3) $160,000 in FY 17 and $330,000 annually thereafter to the Municipal Revenue Sharing Account.1

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to inflation.

1 PA 15-244, as amended by PA 15-5 JSS and PA 15-1 DSS, requires a monthly transfer of a portion of the sales tax generated into the Municipal Revenue Sharing Account and the Special Transportation Fund. The general sales and use tax rate, from which the diversion occurs, remains at 6.35%.