Fireworks law change adds some pop to tax receipts

'The Fourth was on a Wednesday... that means sales are usually 20 percent less.'

In 2010, the General Assembly and Gov. Donald L. Carcieri approved the sale of ground-based fireworks that sparkle. The rationale was that the state was losing sales tax revenue to Connecticut and New Hampshire, nearby states that sell fireworks that are illegal in Rhode Island. More

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GOVERNMENT

Fireworks law change adds some pop to tax receipts

'The Fourth was on a Wednesday... that means sales are usually 20 percent less.'

BLOOMBERG FILE PHOTO/GABE PALACIO
FOURTH OF JULY FIREWORKS.
Posted 9/10/12

In 2010, the General Assembly and Gov. Donald L. Carcieri approved the sale of ground-based fireworks that sparkle. The rationale was that the state was losing sales tax revenue to Connecticut and New Hampshire, nearby states that sell fireworks that are illegal in Rhode Island.

Has the change been worth it? We might never know for sure. That’s because revenue from established stores include the fireworks tax revenue as part of their overall sales tax owed to the state.

“Walmart, Benny’s, other taxable sales would be mixed in with the sales tax collected from the sale of fireworks, and we have no way that I am aware of to tease out the fireworks sales from all other taxable sales,” said Paul L. Dion, chief of the R.I. Office of Revenue Analysis. “The sale of fireworks is subject to the sales tax and all sales tax receipts are deposited into the general fund.”

The one thing the state can determine is the revenue submitted by the individual stands that sprout along the roadsides in June and July, because their sales taxes are generated from fireworks exclusively.

“In fiscal 2011, total sales tax collected from these roadside booths was $54,085. In fiscal 2012, the total sales tax collected from these roadside booths was $72,811,” Dion said. You can also consider it a growth industry of sorts. In 2011, there were 29 roadside booths in operation. In 2012, there were 50 roadside booths. “The sales tax collections for 2012 are likely conservative, as one of the operators of the roadside booths has not filed their sales tax returns for 2012 yet,” he added.

Based on these figures, $772, 542 was spent on fireworks in fiscal 2011. In fiscal 2012, $1.04 million of fireworks were purchased. And these figures do not include large chains or stores that sell fireworks as only part of their inventory. For every $1 million in fireworks sales, Rhode Island will bring in $70,000 of tax revenue.

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