GOP and Sales Taxes
It seems the RI Republicans in the State House might be finally stumbling on to an idea they can hang their hats on. Eliminating the state sales tax. Granted, it’s one that they may be simply saying “me too” on as the RI Center for Freedom and Prosperity suggested this back in June. However, that’s the whole point. The reason for places like this Center is so they come out with reasoned and researched ideas and then the legislature can decide which ones make sense and move them forward.
This type of idea is exactly the kind of bold thinking that the GOP needs to jump on. This is the party that can’t even come up with a unified platform, but if they could forget about all the silly internal bickering they seem to get involved with and rally around an idea like this and sell it to the people of the state, from the leadership to every town committee, it’s something that they could possibly see advanced.
Some are having difficulty understanding how eliminating the sales tax can help the state after about $880M of revenue is brought in through this tax. Even if businesses were to boom with the elimination of the tax, a trillion dollars multiplied by zero percent is still zero. But, if you need any evidence in seeing what a lower sales tax can do, look no further than Attleboro and Seekonk. It’s no coincidence that so many stores are sitting right on Rhode Island’s borders. If Rhode Island were to go to zero sales tax, we’d gradually see these stores move across the border and into the state.
But how would the state cope with the loss of the $880M in lost sales tax revenue? Well, for one, it’s not that much, it’s only about half of that when you don’t count the gas tax, tobacco tax and meals tax that would remain in effect, according to the actual report on the Center’s site. They also claim somewhere between 50 and 70% of the lost revenue would be reclaimed on the increased business presence in the state and the additional income tax revenues. If you have more business, you have more jobs and with more jobs, you have more income tax. The Center advocates for the remaining 30-50% to be made up through cuts to the state’s services and even eliminating about $7M just by downsizing the state’s tax collectors and tax enforcement agents.
I believe that many perceived and real problems go away when people have a job and have income. If we have businesses in the state, people will have jobs, people will have money, people will buy homes in the state, property values will finally increase and municipalities will be able to turn around many of their financial woes.
Finally, here is an idea that the state Republican party can actually get behind, do the work and get all the numbers. Make an intelligent and reasoned case to the people of the state, put on an election-like campaign blitz and then let others explain why we should all pay 7% on top of the cost of goods. Even better, this would get people to stop shopping in Massachusetts and keep the money in Rhode Island, for Rhode Island.