Chafee Floats Expansion of Sales Tax in Gubernatorial Coming Out Party
After loaning himself a couple hundred grand, former Senator Lincoln Chafee announced his expected bid for Rhode Island Governor as an independent this morning. The headline is his willingness to expand the sales-tax base. From Katherine Gregg’s story:
While he would prefer the state generated new revenue from economic growth, “not by raising taxes and fees,” he said: “We have to honestly confront the immediate gap between the revenue we take in as a state government, and what we need to spend to support the services we provide, particularly our schools and state colleges.”
Chafee said he believes “the least harmful tax to job growth and economic development is a broad-based sales tax.”
While Rhode Island’s 7 percent sales tax is “already the nation’s second highest, surpassed only by California…Rhode Island has one of the broadest lists of exemptions, including: food, clothing, over the counter drugs, over 70 categories that total $9 billion a year.”
“Make no mistake; I will oppose any changes to our taxes without first reforming our spending, particularly the mandates,” he said. But “we have to make choices,” he said, and “rather than forcing our property taxes to rise across Rhode Island, we should carefully examine a two-tier sales tax. Other states have this system and it is working.
“Illinois has a 6.25 percent sales tax but a separate 1 percent tax on food and over the counter drugs. Tennessee has a 7 percent sales tax but a 5.5 percent tax on groceries. Working together, we can find the right formula for Rhode Island, one that provides the revenue we need to spare property taxpayers an ever-increasing burden, while taking into account the strain that families already feel from taxes.”
This isn’t the first time this idea has been floated–the Poverty Institute has been throwing this idea out there for a few years, for instance–and it’s in line with Chafee’s track record of favoring tax increases to “pay for” things while also proposing budget cuts. The only problem is that Chafee’s brand of fiscal responsibility seems to always get the tax increase side of things through and not the promised cuts. I have little faith that a gravitas-challenged Governor Chafee will be able to persuade RI’s General Assembly to do any different.
UPDATE: Chafee offers more ideas HERE (I assume this is the prepared text of his announcement speech).