Tax debate heats up in Rhode Island as some push for a "game-changer"

Mar 6, 2013

The debate over tax policy is heating up as the House Finance Committee gets set to hear testimony Wednesday on Governor Lincoln Chafee's proposed cut to the corporate tax.


-- Chafee's pitch to cut the corporate tax rate, from 9 percent to 7 percent over three years, has attracted fairly broad support. Yet the Economic Progress Institute says "the state cannot t afford to lose so much revenue when there are so many pressing needs."

-- CVS is making some ominous sounds, as the ProJo reports, about reviewing its ties to Rhode Island should the state reduce a tax credit that benefits the company.

--The RI Center for Freedom & Prosperity has revised sharply downward the estimated cost for implementing its proposal to eliminate Rhode Island's sales tax (which produces almost $1 billion in revenue each year). On a related note, state Representative Jan Malik (D-Warren) says merchants near the Massachusetts border near lower sales taxes to remain competitive.

In a news release, Malik says he's sponsoring a bill to eliminate the sales tax to spark "a serious conversation":

Our sales tax is killing small businesses, especially those in border communities. How can Rhode Island continue to compete at 7 percent, with Massachusetts already lower than us and considering reducing its sales tax even farther? How can Rhode Island restaurants compete at 8 percent? They can’t. We need to find a way to fix this, and a serious discussion of our sales tax is a discussion we need to have, now, before more small stores close their doors.

Malik says business at his Warren liquor store has dropped by 20 percent over the last two years:

Will Rhode Island eliminate its sales tax? Likely not. Should Rhode Island have a serious discussion about where we stand and where we should or could be? Absolutely. Should we continue to ignore the issue and hope for the best, or should we finally have a comprehensive discussion on the matter?

In my opinion, doing nothing is doing a disservice to the taxpaying citizens of our state and to the small businesses that are suffering.