Letter: State should debate eliminating sales tax

letter-head
To the editor,
When I introduced legislation to eliminate the Rhode Island sales tax, I indicated that I had one goal in mind – to start a serious conversation.
Our sales tax is killing small businesses, especially those in border communities. How can Rhode Island continue to compete at 7 percent, with Massachusetts already lower than us and considering reducing its sales tax even farther? 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.
Apparently, I have accomplished the goal of getting a discussion started. In a recent article in GoLocalProv, a number of organizations and individuals have weighed in. The Rhode Island Center for Freedom and Prosperity has offered a positive view of my proposal, while others, such as URI economist Dr. Leonard Lardaro and URI business administration professor Ed Mazze, have found fault with the idea, expressing their concerns about how the state could make up the lost revenue. But even Dr. Lardaro said in that article that this is a conversation worth pursuing.
All of this proves one point – that there are individuals and organizations with opinions about the Rhode Island sales tax who are interested in sharing them. To date, they have not been given a forum to share those ideas and calls for a serious study of the issue have been little more than solitary voices that have been easily ignored.
We cannot ignore the fact that Rhode Island businesses, especially in border communities, are losing customers to Massachusetts. 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. I am down 20 percent in business over the past two years, and it doesn’t matter if we have low prices at my liquor store or not. People just don’t way to pay a sales tax when they can drive a few miles to Massachusetts where there is no sales tax on liquor.
Will Rhode Island eliminate its sales tax? Likely not. Should Rhode Island have a serious discussion about where we stand and where we should or could be? Absolutely. Should we continue to ignore the issue and hope for the best, or should we finally have a comprehensive discussion on the matter?
In my opinion, doing nothing is doing a disservice to the taxpaying citizens of our state and to the small businesses that are suffering.
Jan P. Malik
Representative – District 67
Barrington, Warren

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2 Comments

  1. Metacomment said:

    Rep. Malik,

    This discussion is very self servicing. You own a liquor store in a town that borders Massachusetts! How will Rhode Island would make up the $887 million in annual revenue the sales tax generates?

    The first solution this state needs is a reduction in government spending. What are you (and other officials) doing to fix that? Let’s cut government and reduce property taxes. It’s time you start working for the majority who elected you, not yourself.

    • jaqdadi said:

      The corresponding increase in sales and business from reducing or eliminating sales tax on Restaurants and liqour stores will go along way to make up any sales tax revenue that is lost.

      I don’t approve of eliminating all sales taxes, but, we should for the sake of fair business, eliminate the ones that take business from the state. Mr Malik is correct to cite his own experience as a small business owner in this discussion. He has to pay income tax on the revenue from that store. 20-30% more business would mean 20-30% more taxes he will have to pay and maybe one or two more jobs he can offer. I don’t see any problem there.

      As time goes on with these tax issues and more people decide to use MA’s no tax on liqour and some other things, doors will close on some of these businesses and tax reveniue will go down even further making cuts even harder and deeper. We should be doing everything we can to bring business to the state, not shoving it away. More buiness=more jobs=more revenue=less cuts necessary.

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