Raimondo: ‘Perception matters’

It’s unlikely the recent elimination of the sales and use tax on energy for commercial users will by itself lure business owners to Rhode Island, but Gov. Gina M. Raimondo says it could be a step toward improving the state’s reputation for being unfriendly to business.

“Perception matters,” Raimondo told Providence Business News last week. “If you’re thinking about adding jobs, moving your business or starting a business, you look at those rankings and they impact your decision.”

National business surveys repeatedly label Rhode Island as being a tough place to own and operate a business.

Forbes Magazine most recently ranked Rhode Island fifth worst for business in its annual “Best and Worst States for Business” survey. It’s the fifth consecutive year the Ocean State has ranked in the bottom five.

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But Raimondo says she’s committed to reversing the perception and believes the July 1 elimination of the 7 percent energy sales tax helps make Rhode Island more competitive regionally, as Massachusetts, Connecticut and New York still impose the tax.

So how much are Rhode Island businesses really saving?

National Grid PLC, Rhode Island’s largest utility company, estimates in April – an average month – the state collected $2.5 million from roughly 71,846 commercial users through the tax.

The company couldn’t immediately provide a median amount, but the total paid by nonmanufacturing commercial users (residential users and manufacturers were already exempt from the tax) averaged about $34.34 per month, or $412 per year.

Of course, for companies that use a lot of energy each year, such as Lincoln-based Amica Mutual Insurance Co. and Dave’s Marketplace Inc. – yearly savings will be more.

Together, the insurer and independent grocer could save more than $180,000 each year, according to Raimondo.

But for many companies, especially smaller ones, savings could be minimal.

Raimondo, however, thinks the savings, when paired with the recent $50 reduction to the corporate minimum tax – now totaling $450 – and her push to improve workforce training programs, together make the state more attractive.

“When you start to add it all up, yeah, I think businesses would [move here],” Raimondo said.

John C. Gregory, president of the Northern Rhode Island Chamber of Commerce, agrees with the governor.

“No one is going to move to Rhode Island because they’re not going to have to pay the 7 percent tax,” Gregory said. “But you can put [the savings] back into your business.” •

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