State of Rhode Island General Assembly

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Date

3/1/2013

Title

RI sales tax: Time to start a serious conversation

ShortDescription

When I introduced legislation to eliminate the Rhode Island sales tax, I indicated that I had one goal in mind -- to start a serious conversation. Will Rhode Island eliminate the sales tax? Likely not. Should Rhode Island have a serious discussion about where we stand and where we should or could be? Absolutely. Doing nothing is doing a disservice to the taxpaying citizens of our state and to the small businesses that are suffering.

Description

When I introduced legislation to eliminate the Rhode Island sales tax, I indicated that I had one goal in mind – to start 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.

Apparently, I have accomplished the goal of getting a discussion started. In a recent article in GoLocalProv, a number of organizations and individuals have weighed in. The Rhode Island Center for Freedom and Prosperity has offered a positive view of my proposal, while others, such as URI economist Dr. Leonard Lardaro and URI business administration professor Ed Mazze, have found fault with the idea, expressing their concerns about how the state could make up the lost revenue. But even Dr. Lardaro said in that article that this is a conversation worth pursuing.

All of this proves one point – that there are individuals and organizations with opinions about the Rhode Island sales tax who are interested in sharing them. To date, they have not been given a forum to share those ideas and calls for a serious study of the issue have been little more than solitary voices that have been easily ignored.

We cannot ignore the fact that Rhode Island businesses, especially in border communities, are losing customers to Massachusetts. I am one of the small business owners getting hammered because, at least in terms of sales tax, I cannot compete with my nearby Massachusetts competitors. I am down 20 percent in business over the past two years, and it doesn’t matter if we have low prices at my liquor store or not. People just don’t want to pay a sales tax when they can drive a few miles to Massachusetts where there is no sales tax on liquor.

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.

(Jan P. Malik is the Democratic State Representative from District 67, Barrington, Warren.)

Op-Ed By

By Rep. Jan P. Malik