Republican gubernatorial candidate Allan Fung on Tuesday unveiled a $200 million tax-cutting proposal that he billed as a way to jump-start Rhode Island's economy.
Speaking at Phred's Drug, a third-generation family business on Oaklawn Avenue in Cranston, Fung called for a series of moves to lower taxes in fiscal 2016, with further incremental reductions through fiscal 2019. "We really need a fundamental tax strategy that will convert Rhode Island's tax system from a job-growth impediment to a competitive advantage," Fung said while introducing his plan. Here's how he outlined his proposed tax cuts:
-- Lowering the state's corporate tax from 9 percent, to 6.5 percent, in fiscal year 2016 (and eventually to 5 percent);
-- Matching the federal exemption on the estate tax;
-- Cutting the minimum corporate tax in half, to $250, in fiscal 2016 (and eventually lowering it to $50);
-- Reducing the state sales tax from 7 percent to 6.25 percent in fiscal 2016 (and eventually to 5.5 percent).
Fung said he'd pay for his tax-reduction package by withholding a 12.5 million payment to bondholders in failed video game company 38 Studios. He said restraining the growth of state spending to rate of inflation would generate an additional $70 million. Fung said he'd generate $48 million through an across the board 5 percent cut in state personnel costs and plans to come up with $70 million more through a projected budget surplus.
Fung's initiative comes as he faces a sharp challenge from fellow Republican gubernatorial candidate Ken Block.
Fung dismissed a suggestion that his tax-cutting proposal was tied to primary politics, but he took a not-so-subtle dig at his businessman-opponent with this line: "Unlike other candidates in this election for governor, who can only talk about reducing government spending, I have that experience and track record to get the job done. I've demonstrated in Cranston I know how to find efficiencies and get the most out of every tax dollar."
Around the time of Fung's news conference, Block's campaign manager, Jeff Britt, asked via Twitter whether the mayor's proposal was "like his reform plan," dubbed by Britt "[a] total copy of all that Ken Block has been saying and pushing." Referring to Fung, Britt said, "Be original, please."
In February, Block released a plan that called for cutting the corporate tax, from 9 to 7 percent; eliminating the minimum corporate tax for new businesses; and reducing the estate tax, among other changes.
In a telephone interview, Britt noted how Fung outlined plans during his campaign announcement in January to call for a review of tax policy and "now he's got a tax policy that's almost exactly Ken Block's plan." Britt also pointed to Rhode Island's perennial budget deficits in calling Fung's partial reliance on a budget surplus unrealistic.
Fung's most recent budget included no new taxes, although local taxes went up in Cranston in fiscal years 2011 and 2012.
While efforts to cut state personnel costs could be expected to meet sharp resistance, Fung insisted his plan is practical. He called his tax-cutting pitch a game-changer for a state that continues to struggle with one of the highest unemployment rates in the nation.
"Just in the first year of implementation, Rhode Island will be one of the most competitive states for business taxes and business-friendliness in the Northeast," Fung said. "My message today to the country is that if you have a business or if you want to relocate in Rhode Island, you will have a partner in the Fung administration to do so, and on day one of a Fung administration, we're going to declare Rhode Island 'open for business.' "