Where One Percent Becomes Two in the Governor's Tax Increase Plan

On the WPRO Morning News this morning, Lisa Blais from the Rhode Island Tea Party pointed out an aspect of Governor Lincoln Chafee's sales-tax increase plan that so-far has been largely overlooked -- the Governor's budget raises the additional tax in Rhode Island on meals and on hotel rooms, above the regular sales tax, from 1% to 2%. Following the state legislature's conventon, the blue text in the exceprts below signifies proposed additions to existing law...

44-18-18.1. Local meals and beverage tax. -- (a) There is hereby levied and imposed, upon every purchaser of a meal and/or beverage, in addition to all other taxes and fees now imposed by law, a local meals and beverage tax upon each and every meal and/or beverage sold within the state of Rhode Island in or from an eating and/or drinking establishment, whether prepared in the eating and/or drinking establishment or not and whether consumed at the premises or not, at a rate of one percent of the gross receipts; provided, further, that for the period commencing July 1, 2011, the rate is two percent (2%) of gross receipts...

44-18-36.1. Hotel tax. -- (a) There is imposed a hotel tax of five percent (5%) upon the total consideration charged for occupancy of any space furnished by any hotel in this state. The hotel tax is in addition to any sales tax imposed...

(b) There is hereby levied and imposed, upon the total consideration charged foroccupancy of any space furnished by any hotel in this state, in addition to all other taxes and fees now imposed by law, a local hotel tax at a rate of one percent (1.0%), provided, however, for the period commencing July 1, 2011, the rate is two percent (2%)...

When combined with the Governor's plan to lower the state's top-tier sales tax rate from 7% to 6%, the effect would be to keep the meal and hotel tax in Rhode Island at the same rate, meaning that Governor Chafee's tax slogan of "lower and broaden" does not apply meals or hotels, where there is no proposed lowering.