“Stealth” Tax Increase?

Dan Yorke has called attention to this piece of legislation–Brought to you by Reps. Slater, Naughton, Diaz, Almeida, and Lima–which amends the current RI Sales tax code to read:

A tax is imposed upon sales at retail in this state including charges for rentals of living quarters in hotels, rooming houses, tourist camps, all services with the exception of medical and legal services, and all food and all clothing over one hundred fifty dollars ($150) at the rate of four and one half (4.5%) percent of the gross receipts of the retailer from the sales or rental charges; provided, that the tax imposed on charges for the rentals applies only to the first period of not exceeding thirty (30) consecutive calendar days of each rental.

For “clarification”, the explanation is:

This act would reduce the state sales tax rate from the current 7% to 4.5%, and would include medical and legal services, as well as food and clothing items sold for more than $150, as taxable services and items.

So, the apparent idea is to broaden the scope of the sales tax while sweetening the proposal with a reduction in the actual rate. Talk about moving the deck chairs on the Titanic….
The language of the bill is a little confusing, but Yorke points out that legal and medical services are actually exempted. Rep. Joseph Trillo (R, Warwick) called Yorke and confirmed this and said the only reason medical services are exempted was to provide cover for the 26 lawyers in the House who’ve thoughtfully exempted themselves from the expanded taxation.
Yorke and Trillo said they will be looking into organizing people to protest the bill by showing up at the House Finance Committee hearing on Tuesday, May 22 at 1:00 PM. Stay tuned.
ADDENDUM: I do know that two Senators–Warwick Democrats McCaffrey and Walaska–have proposed reducing the sales tax to 6% and have also proposed that the EXEMPTIONS be expanded and NOT the tax, as their colleagues in the House would have. Here’s another piece of Senate legislation seeking to do the same thing. I assume (hope?) they’ll be reconciled in Committee. Wonder which tax philosophy–House or Senate–will prevail?
UPDATE: (5/21/2007) Dan Yorke has reported that the state sales tax “reform” discussed above is dead on arrival according to his sources.

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17 years ago

I’m not sure if anyone realizes this (yet), but the current hotel tax in Rhode Island is 13%. We also have the “meals tax” of %1, on top of the 7%, which goes to local towns, for them to foolishly waste. I may not be correct, but I don’t believe that the legislation reduces the 13% hotel tax to 4.5% or eliminates the 1% meals tax.
Anyway, this doesn’t require much thought as to why we should oppose it. Look at the crackpots proposing it!

17 years ago

Of course the game will be to raise it based on the “emergenicies” of the looming deficits. In 5 years it will be back to 7%.

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