Rep. Jan Malik thinks Gov. Chafee “took a slap at small business owners” in his State of the State address Wednesday night, Jan. 15.
Malik, who represents Barrington and Warren in the RI House of Representatives, said that Chafee’s proposal to lower the corporate tax and not the state sales tax will continue to leave small businesses at a competitive disadvantage with neighboring states.
“We’re at 7 percent,” said Malik, who is chairing the Special Joint Legislative Commission to Study the Sales Tax Repeal Act of 2013. “Massachusetts is at 6.25 percent; Connecticut is at 6.35 percent. Small business owners in Rhode Island are at a competitive disadvantage.”
The commission has been studying the state sales tax since last August after Malik filed a bill to make Rhode Island a tax-free shopping state. The legislature opted for a study commission instead.
Malik said he expects the sales tax committee to make a recommendation to lower the tax by 3 or 4 percent by the end of next week. The resulting advantage given to small business owners, he said, also “will create more jobs, and not just for retailers.”
Malik, who owns a Warren liquor store, uses his own business as an example. He saw his revenue jump by 8 percent in December after the state removed the sales tax on liquor and wine on Dec. 1.
“I saw customers I haven’t seen in years,” he said. “It’s a competitive thing.”
Indeed, Malik said, he also is disappointed in Chafee for giving a speech that didn’t address job creation even though the state has an unemployment rate of more than 9 percent.
“I’m disappointed that he didn’t look at job creation,” Malik said. “He gave a fine presentation. But he didn’t address the number one issue: unemployment. You would think that everything is fine according to his speech.”
Malik said the sales tax commission’s recommendation, of course, will go to the House and Senate finance committees through the Speaker and the Senate president. He anticipates that it will be given much more attention there than it will get in the Governor’s office.
“We’ve looked at the income tax,” he said. “We’ve looked at casino revenue. What’s next has to be the sales tax. It can give us a competitive advantage over our neighboring states, which will create more jobs."