A 3.0% Sales Tax Is A Question of Fairness

As taxpayers continue to be asked to fund generous corporate subsidy programs, lawmakers are now dueling over two new spending ideas, reimbursing localities to phase-out the car tax and public funding for free college tuition, each of which would likely further raise taxes and fees on Rhode Islanders. But would these programs make Rhode Island a better state? Or would the more innovative and bold policy concept of cutting the state sales tax help families become more self-sufficient?

Not only does cutting the sales tax to 3.0% make sense for improving our state’s troubled economy, it is also a question of fairness.

The status quo in Rhode Island has broken many promises, and unfairly denied our people a cut to the nationally high state sales tax rate. The sales tax was originally implemented for a specific municipal purpose, while subsequent increases were supposed to be temporary. In both cases, the regressive tax has remained a costly burden on Ocean State families and businesses. There can be no doubt that the sales tax disproportionately harms poorer people, but the sales tax is also a tax on business contributing to our state’s poor business climate rankings.

Among the big ideas in the Center’s analysis, which projected the impact of both the car tax and sales tax reform ideas, we show that a 3.0% sales tax would keep significantly more money in the pockets of Rhode Island families and businesses ($585,000,000 vs. $215,000,000!) Car tax repeal would only impact those businesses that have company owned vehicles. Rhode Island is losing the competition to retain and attract families who want to make our state their home-of-choice. The Ocean State could be a place where families can work hard, earn a respectable living, and support their families.

Neither the Speaker nor the Governor have offered research or economic projections on the impact of their respective ideas. The Center, conversely, offers well-researched projections from a credible economic modeling tool. There are better answers than the status quo public policy culture in Rhode Island. How many of us would say that the status quo is making anything easier on the average family? For too long, the political elites have thought they’ve known how to better run your life than you do. I encourage you to speak out against the insiders who want further their own agenda, while your family is kept out of the process. Things can change here in the Ocean State, but it is to each of us to make sure that it happens.

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