Cutting RI Sales Tax Deserves Consideration

A bill that I introduced in the House of Representatives this year calls for the elimination of the state’s 7 percent sales tax. That bill will be heard in the House Committee on Finance on Wednesday, May 15 (beginning at 1 p.m. in Room 35).

Any talk about Rhode Island’s sales tax and what, if anything, to do about it generates a pretty broad range of opinions. On one side, many would like to see the tax eliminated, to give Rhode Island businesses an advantage over nearby states and to give consumers a break. On the other side are those who say eliminating the tax would leave an enormous hole in the state budget that could not be made up for even with improved sales of no-longer-taxed goods and items. In the middle somewhere there is probably a very good, very workable answer.

When I introduced the bill, my primary concern was businesses in border communities, who are being hammered because they are not operating on an even playing field with comparable businesses in those other states where the sales tax is lower or, in some industries, non-existent. But more than anything, I wanted to start a conversation on a subject that is talked about and grumbled about and complained about by many, many residents but which never seems to rise to the level of serious discussion by government officials. And all the while, Rhode Island residents are making the short trip across the state line to save money on their purchases. How does that help our sales tax revenue when those sales are not being made in Rhode Island?

That’s why I am urging all those who are able to attend the May 15 Finance Committee meeting and share their opinions about this subject. And I especially hope that consumers – regular Rhode Islanders who have to pay the high sales tax on items for their children, or goods and products for their homes, or even just a meal at a local restaurant -- will attend the meeting.

Shortly after introducing my bill, it gained some support and some opposition. The Rhode Island Center for Freedom and Prosperity has backed the bill, while URI economist Dr. Leonard Lardaro and URI business administration professor Ed Mazze found fault with the idea. But even Dr. Lardaro acknowledged that this is a conversation worth pursuing.

We cannot ignore the fact that Rhode Island businesses, especially small ones, are losing money to nearby Massachusetts or Internet sales. We can’t ignore the fact that Rhode Islanders would rather drive a few extra miles to buy goods if they can save money.

Will my bill to eliminate the sales tax pass? Probably not.

Do we need to have a serious discussion about this topic? I believe so.

Should we continue to ignore the issue and hope for the best? Doing nothing is doing a disservice to the taxpaying citizens of our state and the many small businesses that are suffering.

Jan P. Malik, Representative – District 67 Barrington, Warren