The Rhode Island tax man will give liquor store owners a break starting December 1, when the sales tax on wine and spirits (but not beer) is cut from 7 percent to zero.
But first he will take money away — a lot of money, says Rick Patel, owner of Tiverton Liquor Store on Main Road a couple hundred feet south of the Fall River line.
“This state can’t get anything right,” Mr. Patel said Friday morning, hours after Senate approval of the budget.
Along with that sales tax cut, the measure increases the excise tax for beer, wine and spirits starting immediately (July 1). The excise climbs from $3 to $3.30 per barrel of beer (several pennies per six pack); 60 cents to $1.40 per gallon for wine (about an extra 6 cents on a 750-milliliter bottle); and from $3.75 to $5.40 per gallon of spirits.
“They raise the excise tax right now but we have to wait five months (until Dec. 1) for the sales tax to be gone. That’s going to kill me for those five months.” He estimates that the excise tax will cost his store around $23,000 to $24,000 over that time.
He also predicted that the sales tax cut won’t last. “You watch what happens. When 2015 comes they’ll decide they are losing money so they’ll put it right back again … (and) they’ll leave that excise tax where it is … Just like tolls — they stop them now but they’ll put them right back — you watch. This state always finds a way to make life hard on the businesses.”
Rep. Jan P. Malik (D-Dist. 67, Barrington, Warren) led the effort to eliminate the sales tax on liquor in Rhode Island as a way to “level the playing field for Rhode Island’s small businesses.”
His take on the measure was more upbeat than that of Mr. Patel.
“This is a win for the consumer as well as those liquor stores which have lost a lot of business to their competitors in Massachusetts,” he said.
According to the measure that was approved by the legislature, elimination of the sales tax on spirits and wine will remain in place through June 30, 2015. Supporters included it in the budget in an attempt to help liquor stores that have been losing business to shops in Massachusetts, which eliminated sales tax on alcohol two years ago.
Mr. Patel said his store, which is within sight of Massachusetts competitors up the road, took an immediate and severe hit the moment Massachusetts eliminated its sales tax on alcoholic beverages over two years ago. Sales dropped 23 percent within a few weeks and that decline soon passed 28 percent.
“I charge $19.99 for a bottle, they charge $19.99 — but then I have to add $1.40. People complain about that,” Mr. Patel said back in March. He said it’s no accident that liquor stores are lined up on the Massachusetts side of the state line. “It’s not a fair fight.”