There's an Obvious Solution to the Sales Tax Problem, You Know

Today, we get the advocacy profile — a standard newspaper fare by which readers are made unequivocally aware of the "objective" reporter's opinion:

Inside the Liberty Elm Diner Thursday, the lemonade was cold and the bacon was hot.

But the mood hung heavy with a sense of foreboding.

Customers who devoured BLTs and pancakes wondered if that would be their last meal at the diner car that’s become a local favorite.

A day earlier, the Elmwood restaurant was one of 1,200 businesses statewide that received notice that it must close up shop unless it pays its overdue sales taxes immediately.

The timing was especially painful, coming just hours after television crews from The Food Network had visited the cozy diner for a segment on its hit show Diners, Drive-Ins and Dives, which promises to give the eatery national exposure.

Owner Carol DeFeciani is forthright about her predicament. She owes thousands — $25,000 to be exact — and that the police could shut her down at any moment. But like so many small business owners, she’s not sure how her debts mounted.

Gary Sasse again makes a surprise appearance as The Villain:

Department of Revenue Director Gary Sasse said it is important to distinguish sales tax payments from other kinds of taxes. If a business is up and running, it is presumably collecting sales taxes on behalf of the state, which should be set aside and passed along to the Division of Taxation. So long as that process is carefully followed, businesses shouldn’t fall behind as they might in other areas.

In an era of hundreds of billions of dollars of stimulus giveaways, it seems to me that the state could come up with some way to give these small businesses a chance to keep running despite tax lapses. At the very least, the bureaucrats could give the owners a reprieve until a few weeks after the General Assembly reconvenes.

The reason for that schedule is the operative datum from the article to which Marc linked yesterday:

[Tax Administrator David] Sullivan said the number of business owners in this category is up this year, though not significantly despite the recession.

In other words, this isn't a special circumstance due to the economy. (Although a disclaimer ought to be made that Rhode Island was already into the recession last year, so it would be helpful to know the data going back a few years.) Every year, this number of businesses finds it necessary to help themselves to free loans from the state by using money that they have collected in the state's name for something else. We can argue adjustments and exceptions, but that's the bottom line.

And as such it points us right back to the drumbeat epiphany that Rhode Island is not an easy place to do business. Cynthia Needham might have added to her advocacy article about the little diner that couldn't, for example, that the General Assembly added another 1% to the sales tax for businesses that sell meals and beverages back in 2003. As I recall, that was yet another gimmick whereby the state made it appear to be keeping up its promises (in this case, to municipalities) while actually taking the pound of flesh from somebody else.

It's illogical to push for constant growth of government and the consequent increases in taxation and then to treat the difficulties of hardworking entrepreneurs as another circumstance in which parties need a helping hand from the government (e.g., flexible payment plans for back taxes). These are the fruits of your political philosophy, Rhode Island. Live with them, or change your policies.