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    Game Changer — Zero.Zero Sales Tax Proposal in Rhode Island

    Game Changer — Zero.Zero Sales Tax Proposal in Rhode Island

    Currently, the Ocean State is “the most anti-free-market, anti-family, and anti-jobs state in the entire country.”

    For perhaps the first time in recent memory, the Rhode Island General Assembly will consider legislation that could have a profound positive impact on the lives of virtually all residents and businesses in the state.

    Rhode Island families are being torn apart. Parents, children, and siblings are being driven out of the state in search of good work or retirement at a more reasonable cost of living. Businesses struggle in our uncompetitive business climate.

    With some of the worst jobs outlooks and population trends in the entire nation, the Ocean State is in dire need of “out-of-the-box” thinking to restore financial security and hope for a brighter future for our home state.

    The RI Center for Freedom & Prosperity’s recommendation to eliminate the state’s 7% sales tax, which would bring shoppers and retail and construction jobs back to Rhode Island that will keep our families and businesses intact and home here in the Ocean State, has resulted in bipartisan legislation submitted in February in the RI General Assembly.

    Yet, those who support the status quo, even though they themselves have pledged that the economy would be their number one priority for the 2013 legislative session, feel that we should be “boxed-in” by a demonstrably failed state budget.

    Think of the numbers 50-50-50-1.

    Depending on the index, Rhode Island ranks at or near: 50th in employment; 50th in population out-migration; and 50th in business climate … all because it ranks #1 in the category of redistribution-of-income policies. This makes the Ocean State the most anti-free-market, anti-family, and anti-jobs state in the entire country.

    No wonder Rhode Island is in a death spiral, with fewer and fewer productive people to support an ever increasing and burdensome budget.

    And it is this very budget that opponents of our sales tax repeal plan point to as reason not to foster tens of thousands of new jobs, not to breathe new life into our economy and small business sector, not to reduce the cost of living for every family (especially at lower incomes) and business, and not to provide local municipalities with $150 million in annual windfall revenue.

    Imagine the headlights on highways I-95 and I-195 filled with cars of shoppers and people coming into the Ocean State, instead of the tail-lights of those heading out.

    Imagine the thousands of unemployed who will be able to earn a paycheck instead of a welfare check.

    Imagine $900 million left in the pockets of area shoppers to reinvest in the local economy.

    Imagine the new shoppers, higher revenues and profits, and lower compliance costs for local businesses.

    Imagine RI businesses competing in southern New England and stepping to the plate without a proverbial 7% weight on their bats.

    But the ruling class in Rhode Island has no such imagination. All they can see is the $900 million in sales tax revenue that will be lost from their prized budget; $900 million less they can hand out to preferred insiders. This is not leadership: afraid to upset the apple-cart by hiding behind the limitations of a failed, job-killing budget.

    Our Center has crunched the numbers and found that it is the $900 million obstacle that is imaginary. In reality, our estimates suggest that it would take only $105 million in budget savings in fiscal year 2014 to implement this game-changing reform. The legislation on the table would eliminate the sales tax as of October 1 of this year. That means the state will still cash in on the busy summer tourism months, even as the people and stores of Rhode Island see their holiday shopping dollars go farther.

    Then, if political leaders were SERIOUS about making the economy their number one priority, they would apply last year’s budget surplus to help pay for repeal of the sales tax. And if the political class were SERIOUS about making jobs their number one priority, they would likewise freeze the 2014 budget at 2013 levels.

    And finally, by realizing the huge projected increases in other taxes and fees due to the expected massive economic boom the state would see, just under $105 million in savings would remain to be found in the budget to put Rhode Island on a fast-path to economic growth and renewed vitality.

    Repeal of the sales tax is not a budget-busting reform policy by any stretch of the imagination. This is a win-win solution for the state of Rhode Island. Imagine that.


    Mike Stenhouse is CEO for the RI Center for Freedom & Prosperity, a free-market public policy think tank.


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    Estragon | March 5, 2013 at 3:19 pm

    I’ll have what Mike’s having!

    Valerie | March 5, 2013 at 3:23 pm

    You just made an excellent argument for federalism. With 50 different states, we have an opportunity to try out all kinds of combinations of policy, and then find out what works.

    radioone | March 5, 2013 at 3:38 pm

    Having so many representatives, looters and moochers feeding at the public trough it’s almost impossible for something like this to pass.

    radioone | March 5, 2013 at 3:38 pm

    Having so many representatives, looters and moochers feeding at the public trough it’s almost impossible for something like this to pass.

    TrooperJohnSmith | March 5, 2013 at 3:46 pm

    How do you squeeze so many moochers, freeloaders, socialists and progressives into such a small space as Rhode Island? Are they miniaturized? Maybe transistorized?

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