Warwick Sen. Michael McCaffrey has introduced (S 0159) legislation to lower the state sales tax from 7% to 6%. As McCaffrey points out, the 7% rate was originally put into place to help the state bailout from the credit union crisis in the 1990’s. Now that it has served its purpose–all of the money has been paid back–it’s time to go back to 6%. The legislation will also “reduce the excise tax paid annually by the owners of motor vehicles, boats, airplanes and trailers (excluding mobile homes), from 7 to 6 percent.” Here’s more:

“The 7-percent sales tax was not meant to be a permanent change. The 1-percent increase in the early 1990s was necessary to pay back the depositors affected by the credit union crisis. Now those debts have been paid, so the reason no longer exists. It’s unfortunate enough Rhode Island taxpayers got stuck with the bill for the credit union bailout, but it’s wrong to continue charging taxpayers for it after those debts are long gone,” said Senator McCaffrey….
He said the high tax rate can hurt businesses in Rhode Island, particularly since the state is so small that it is not very difficult for shoppers to take their business to other states. Massachusetts’ sales tax is 5 percent, while Connecticut charges 6 percent. New Hampshire has no sales tax at all.
Senator McCaffrey acknowledged the state’s current budget deficit, but said it doesn’t help the state’s fiscal health to continue putting Rhode Island’s environment for businesses and shoppers at a disadvantage by setting the sales tax at a rate higher than that of neighboring states.
“Besides, the state made a promise to taxpayers, and you can’t expect to build trust in government if that government breaks its promises,” said Senator McCaffrey, who serves as chairman of the Senate Judiciary Committee.

Kudos, Senator.