2014 Government Regulations & Business Summit
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By Kimberley Donoghue
PBN Web Editor
PROVIDENCE – The R.I. House of Representatives approved a fiscal 2012 budget by a vote of 60 to 9 Saturday that discards Gov. Lincoln D. Chafee’s proposed sales tax expansion.
The vote took place shortly before 2 a.m. Saturday following 10 hours of debate, The Associated Press reported.
The $7.7 billion plan, first approved by the House Finance Committee on June 17, closes the state’s initial deficit of approximately $300 million by cutting some programs previously paid for with federal stimulus funds, state department consolidations, as well as a small surplus and higher-than-expected revenue from the previous year, a General Assembly news release said.
The plan now moves to the state Senate.
The budget discards Chafee’s $165 million sales tax expansion but makes a handful of items subject to the existing 7 percent sales tax, including: pre-written computer software delivered electronically, insurance proceeds, nonprescription medicine and sightseeing package tours.
The House selected these items “based on the tax structures of neighboring states to avoid putting Rhode Island’s business at a competitive disadvantage,” it said.
“We listened to the members of the public and to our business leaders, who made it very clear that they wanted us to hold the line on tax increases,” said House Finance Committee Chairman Helio M. Melo about discarding Chafee’s sales tax proposal. “The House has felt that Rhode Islanders are struggling enough and we couldn’t place an additional tax burden on them.”
The passed legislation, 2011-H 5894Aaa, would also end refunds of sales tax that some companies get on construction materials through the R.I. Economic Development Corp. and the Industrial Facilities Corporation.
The proposal would come into effect on Oct. 1 and would raise an estimated $17 million in revenue for 2012 and $25 million in 2013.
The budget also includes: