Hearing set on R.I. tax and fee legislation

PROVIDENCE – A tax and fee measure before the R.I. General Assembly will be aired tomorrow at 4:30 p.m. in a public hearing by the House Finance Committee.

The Rhode Island Chamber of Commerce Coalition is urging local businesspeople to speak out against the bill, either in person or by e-mail. The Greater Providence Chamber, and other groups in the coalition, have been contacting members directly.

“Unfortunately for the business community, in an effort to plug the near $500 million state budget deficit, legislation has been introduced at the State House that would not only institute a tax on some services, but would do much, much more harm,” John C. Gregory, president and CEO of the Northern Rhode Island Chamber of Commerce, said in a statement last night. “A new piece of legislation, 82 pages long, has been proposed that would raise personal and business taxes and fees, and create new business taxes and fees.”

The $300 million measure – “The Economic Growth and Fairness Act of 2008,” (H-7950 and S-2668) – calls for increasing the state’s personal income tax rate to 27.5 percent of federal liability and freezing the flat tax, the Chambers said. Increases also are planned in the capital-gains tax and the financial services tax.

The sales tax would be expanded “to include virtually all services,” Laurie White, president of the Greater Providence Chamber, which is not a coalition member, said in a statement last week.

The tax would be imposed on clothing purchases of more than $250; on marketing or product-line literature for boat manufacturers; and on services including dry cleaning, jewelry repair, golf and membership fees, marina fees and services, auto rental companies, janitorial and landscaping services, architectural, property management, interior design and consulting services. Interstate phone taxes also would be affected.

The bill also would repeal several tax credits: the state’s biotechnology credit, the research and development tax credit, the business credit for capital investment, the scholarship and tuition credit and the Jobs Development Act.

“Obviously, we will be fighting this measure with vigor and precision,” White said in a statement.

The Rhode Island Chamber of Commerce Coalition is urging local businesses to take action, either by attending tomorrow’s hearing or by contacting their state legislators via the group’s Action Center at RhodeIslandBusinessVotes.com.

But the Chambers’ “Call to Action” was criticized by R.I. Rep. Arthur Handy, D-Cranston, who submitted the House version of the 82-page legislation. (The Senate version was submitted by R.I. Sen. Paul E. Moura, D-East Providence.)

“Many business owners who may have received this alert will be surprised to learn that it results in a overall tax decrease for nearly 90 percent of the people in our state,” Handy said in a statement today, arguing that the measure would actually strengthen both the state’s economy and local businesses.

“This bill contains comprehensive changes to Rhode Island’s tax policies,” he said. “It’s aimed at fixing a broken, regressive tax system that disproportionately hurts people at the middle and low end of the income scale. It will give tax relief to 90 percent of Rhode Islanders while narrowing the state’s structural deficit. People can see that if they look at the whole package and the evidence.”

The measure also is supported by the Campaign for Rhode Island’s Priorities, a coalition of local policy groups, Handy noted. If the bill were approved in its entirety, 90 percent of Rhode Islanders would see their taxes fall and the state would net $161.2 million to $185.2 million in new revenue, the coalition said in a recent report.

UPDATE:

The Rhode Island Public Expenditure Council, however, urged caution.

In a statement the day of the hearing, the policy group described Handy’s measure as “an omnibus bill which will have a significant impact on the personal income, sales, business and property taxes currently in law,” and noted that it is only one of several such changes now before the Assembly. (READ MORE)

“At this critical juncture in the state’s fiscal and economic future, RIPEC believes it would not be advisable to create such substantive change without a fiscal and administrative analysis ....

“Without knowing the true impact of the legislation, and given the state’s already significant tax burden, a more prudent course of action would be to exercise caution and continue with the positive steps the state has already made,” RIPEC said.

The public hearing before the House Finance Committee is slated for Wednesday, March 26, in the R.I. State House basement, Room 35 (Trainor Hearing Room); the Chamber estimates the time as 4:30 p.m. For more information about the R.I. General Assembly, including the House and Senate daily calendars and listings of measures introduced each day, visit rilin.state.ri.us.

To learn more about the Greater Providence Chamber of Commerce, visit www.ProvidenceChamber.com. For information about the Northern Rhode Island Chamber of Commerce, visit www.NRIChamber.com. For more information about the Rhode Island Chamber of Commerce Coalition, and its legislative and political advocacy goals, visit RhodeIsland.Illumen.org.