Tax-free zone program would integrate job creation, higher education for economic success
STATE HOUSE – Rep. Gregory J. Costantino (D-Dist. 44, Lincoln, Johnston, Smithfield) is touting a new approach to economic development with his pitch to create a mutually beneficial relationship between the products of higher education and incentivized job creation.
The representative’s bill (2014-H 7913), entitled “The START-UP Rhode Island Tax-Free Zone Program,” would authorize the state to establish tax-free zones affiliated with both public and private universities, colleges and community colleges within the state. Businesses selected for access to such areas would be exempt from state income, business, corporate, local or franchise taxes and fees for a period of up to 10 years. Under certain restrictions, employees of businesses enrolled in the tax-free zone program would not have to pay state income tax on their earnings for that period.
“The state’s economy needs a defibrillator,” Representative Costantino said. “Tax-free zones are a big draw to outside businesses, and it will provide us with the jumpstart we need to induce growth. Attracting industry is key to this stage of Rhode Island’s post-recession recovery process. We know we have a lot of the pieces in place already, including an active dialogue with Rhode Island business owners, a sharp eye on regulatory improvements and the beginnings of a diverse economy, which bode well for such a small state. Now, it’s clear we need more incentives. The smartest way to go about this is to have businesses that are connected to a lot of the amazing research and initiatives that Rhode Island’s college students and graduates are working on. Creating a symbiotic relationship between job creation and higher education would also be one of the best ways to solve our brain drain problem.”
Under the START-UP Rhode Island program, the governor, the speaker of the House and the Senate president appoint a three-member panel to determine who is eligible to participate in such zones. The language of the bill delineates certain requirements of businesses that wish to apply for the benefits of a tax-free zone, including:
Certain types of businesses would be excluded from the benefits of a tax-free zone, including retail and wholesale companies, restaurants, real estate brokers, law firms, medical or dental practices, hospitality businesses, financial services companies, utilities and businesses providing personal services. The START-UP Rhode Island approval board is authorized under this bill to designate up to 20 strategic state assets as tax-free areas. The program would also include a state business incubator, which will be charged with facilitating the growth of these businesses through a multi-tenant, mixed-use facility serving companies in a variety of industries.
The mission of the business must align with the academic mission of the campus, college or university sponsoring the tax-free Rhode Island area;
The business must demonstrate that it will create net new jobs within its first year of operation. It must also maintain those positions after its first year; and
With few exceptions, the business must be new to the state at the time it submits its application for the START-UP Rhode Island program.
The bill has been referred the House Committee on Finance. Representatives Kenneth A. Marshall (D-Dist. 68, Bristol, Warren), William W. O’Brien (D-Dist. 54, North Providence) and Charlene M. Lima (D-Dist. 14, Cranston, Providence) serve as cosponsors of the House legislation.
For more information, contact:
Brenna McCabe, Publicist
State House Room 20
Providence, RI 02903