Connecticut's Proposed 28-Cent Delivery Tax: History, Context, and Potential Impact on Taxpayers

Connecticut lawmakers are considering a proposal to implement a 28-cent tax on retail product deliveries, aiming to bolster funding for the state's transportation infrastructure. This initiative mirrors similar measures adopted in other states and has sparked discussions regarding its necessity and potential effects on consumers and businesses.​

Historical Context: Transportation Funding Challenges

Connecticut's transportation infrastructure has long required substantial investment for maintenance and upgrades. Governor Ned Lamont's recent budget proposal includes significant allocations to accelerate the rebuilding of highways, bridges, and rail lines. The proposed 2025-26 fiscal year budget allocates nearly $2.3 billion to the Special Transportation Fund (STF), with an additional $2.4 billion planned for 2026-27, reflecting a 4% increase each year. This funding strategy aims to address the state's aging transportation network and support economic growth.

Proposal Details: The 28-Cent Delivery Tax

The proposed 28-cent tax would apply to each retail product delivered by motor vehicle within Connecticut, encompassing services like Amazon, UPS, FedEx, and food delivery platforms. Retailers would be responsible for collecting and remitting the tax through quarterly filings. The tax rate would be linked to the consumer price index, allowing for annual adjustments to account for inflation. 

Comparative Analysis: Other States' Approaches

Connecticut's proposal draws inspiration from Colorado, which implemented a similar 28-cent retail delivery fee to fund transportation projects. However, businesses in Colorado have reported challenges, including increased compliance costs and higher consumer prices. Additionally, states like Louisiana, Nebraska, and Maryland have considered but ultimately rejected such delivery fees, reflecting the contentious nature of this funding mechanism. 

Potential Impact on Taxpayers

The introduction of a delivery tax carries several implications for Connecticut residents:​

• Increased Consumer Costs: The tax would likely be passed on to consumers, raising the cost of delivered goods and services. This could disproportionately affect individuals who rely heavily on delivery services, such as the elderly, mobility-challenged, and those without personal transportation. 

• Regressive Nature: Critics argue that the tax is regressive, placing a heavier burden on low-income households that may depend on delivery services for essential items.

• Business Compliance Challenges: Retailers, especially small businesses, may face increased administrative responsibilities to comply with the new tax regulations, potentially diverting resources from other operational needs. ​

  
  

Critiques and Alternative Perspectives

Opponents of the delivery tax suggest that the state should explore existing funds within the $55 billion budget to support transportation projects, rather than introducing new taxes. The 2021 CREATES Report identified potential savings through government efficiencies and service streamlining, which could be leveraged to address funding needs without additional taxation.

Conclusion

As Connecticut deliberates the implementation of a 28-cent delivery tax to fund transportation infrastructure, it is essential to consider the broader implications for consumers and businesses. Balancing the need for infrastructure investment with the economic well-being of residents requires careful analysis and stakeholder engagement to ensure equitable and effective policy outcomes.