public policy

R.I. ties for 2nd highest state sales tax

RHODE Island tied with four other states for having the second-highest state sales tax rate at 7 percent.
Posted 2/15/12

WASHINGTON – Rhode Island tied with four other states for having the second-highest state sales tax rate at 7 percent.

The Ocean State tied with Indiana, Mississippi, New Jersey and Tennessee on the research institution Tax Foundation’s Fiscal Fact No. 291 briefing released Feb. 14, looking at the state and local sales tax as of Jan. 1, 2012.

“Retail sales taxes are a transparent way to collect tax revenue. While graduated income tax rates and brackets are complex and confusing to many taxpayers, the sales tax is easier to understand: people can reach into their pocket and see the rate printed on a receipt,” it said.

“Less known, however, are the local sales taxes collected in 36 states. These rates can be substantial, so a state with a moderate state sales tax rate could actually have a very high combined state-local rate compared to other states.”

Rhode Island does not have a local tax rate and therefore its combined local and state sales tax rates ranked 20th among the 50 states and Washington D.C.

Three states – Delaware, New Hampshire, and Oregon – do not have a statewide sales tax and do not allow localities to charge a local sales tax; they tied for 47th overall.

Tennessee earned the No. 1 spot for its combined state and local rates: 7 percent state, and its average local tax rate, weighted by population, was 2.45 percent – resulting in a combined rate of 9.45 percent.

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