State lawmakers say they want to get Rhode Island off the bottom of numerous lists of business friendliness. One consumer group has a simple solution: eliminate the sales tax.
It’s bold, but unlikely.
Every sale at Twin Oaks includes 8 percent tax: a sales tax and a meals tax.
“Twin Oaks spends $7,000 to $8,000 a month that we send to the state in sales tax. So that could help my business immensely because we don’t know how this economy’s going to turn out,” said Twin Oaks owner Sue DeAngelus-Valles.
There’s another group that believes a reduction in the sales tax would help Rhode Island’s economy get back into gear.
“We need to look at severe incentives, disincentives that will make Rhode Island competitive with our neighbors. That’s the kind of thinking we have and we have to get our heads out of the budget,” said Mike Stenhouse, of the Rhode Island Center for Freedom and Prosperity.
Stenhouses’s group said the loss of the sales tax would be balanced by the growth of businesses that would follow.
“You think of all the retail stores that would immediately see a boom. Think of new retail stores that could be formed. Think of some of the big boxes or warehouses that might now want to come into Rhode Island,” Stenhouse said.
He said legislators will probably not even consider it, but the facts support his idea.
“Right up the road in New Hampshire, there have been studies done that show the hundreds of millions if not billions of dollars of retail business lost from Maine and Vermont to New Hampshire, which also has a zero percent sales tax. If they can do it there and they can take business away from neighboring states, we can do it here,” Stenhouse said.
Some Republicans lawmakers have said they think the sales tax reduction, maybe even elimination, would be a good start to turning around Rhode Island’s economy. But the consensus at the General Assembly is not likely. Only intense political pressure could change that.