Two of Barrington’s state legislators have introduced bills to do away with or lower Rhode Island’s sales tax.
Rep. Jan Malik of Barrington and Warren and Sen. David Bates of Barrington, Bristol and Riverside are sponsors of legislation introduced in the House and Senate that would eliminate the 7 percent sales tax.
Neither expects quick passage – the bill bills will be go down to defeat – but they introduced the legislation to get the conversation on taxes started.
Malik, who owns a liquor store in Warren not far from the Massachusetts border, believes he and other Rhode Island business owners are at a competitive disadvantage with states with lower sales taxes – such as Massachusetts, 6.25 versus 7 percent in RI.
Liquor stores in Massachusetts actually have no sales tax. Malik said his business is down 20 percent since Massachusetts cut its tax on alcohol.
And Massachusetts is actually dealing with a proposal to cut its sales tax even lower – to 4.5 percent.
The bill, 2013-H 5365, calls for the end of the sales tax by October 1 of this year. The bill provides that, as of that date, all regulations relating to the collection of sales tax and enforcement of collections will sunset and, further, that as of October 1, the local meals and beverage tax will also be eliminated.
“Our sales tax is killing small businesses, especially those in border communities,” said Malik, who is a member of the House Committee on Finance to, which the legislation has been referred. “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.”
Malik said his legislation is partly in response to the reports that the Bay State is considering lowering its 6.25 percent sales tax to 4.5 percent.
“How can Rhode Island continue to compete at 7 percent? 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,” he said.
Bates said he believes cutting the sales tax should be part of a larger conversation on taxes as a whole. He introduced bills earlier in the current session to cut RI’s corporate tax and maximum personal income tax.
The sales tax is one of the state biggest revenue sources -- nearly $900 million a year. Malik recognizes the impact from that loss of revenue on RI if it isn’t replaced with something else.
Malik believes that a lower sales tax will be boost economic activity in the state, which will help to replace that revenue stream.
"I just want our state to do better and to level the playing field for those businesses out there that are really hurting because other states are stealing away their customers," said Malik.