If it comes to pass, Massachusetts Governor Deval Patrick’s plan to cut the Massachusetts sales tax to 4.5 percent is great for business on that side of the state line but miserable news for competitors next door in Rhode Island.
Dealing as it must with New Hampshire’s zero percent sales tax to the north, Massachusetts realized some time ago that charging more sales tax than the neighbors is bad for business.
It’s especially bad when you are a tiny state with low-tax competition just minutes away. Rhode Island package stores near the border took a hit last year when Massachusetts eliminated its sales tax on alcoholic beverages — state line billboards and newspaper ads trumpet that savings.
Rhode Island, already hard-pressed to pay the bills, clings desperately to its near-tops-in-the-nation sales tax but must someday realize, as did Massachusetts, that this is a losing proposition.
If borderline businesses wither, 7 percent of nothing won’t do much for Rhode Island’s bottom line.
Let the East Bay pay
And speaking of taxes, Rhode Island Governor Lincoln Chafee’s ‘no tax increase’ budget boast is an affront to this corner of the Ocean State.
Here, taxes will rise and in a big way if his Sakonnet River Bridge toll plan comes true. The toll really would be a tax, after all, since little of the revenue raised would actually be used to maintain this particular bridge.
The countless people who must cross that neighborhood bridge every day twice, four times or more will pay many hundred of dollars more each year for a privilege that has always been free.
It is in part by shifting statewide road and bridge repair costs onto the backs of these few that he manages to keep taxes down for everyone else.
Chafee’s office credits “terrific fiscal discipline” for the no-tax hike pledge. Sending the bill to the East Bay is more like it.