For the last few years, there has been some serious debate over Rhode Island’s sales tax. It’s a tough decision – do we stay at 7 percent or do we lower it a little to stay competitive with our border states? Some people think we should just eliminate it altogether. In order to really get a good grasp on how we should attack the issue, I think we have to think about why people really cross the border. Is it to save on sales tax even if there is only a 75-cent difference? Or is it about convenience? These are fair questions to ask ourselves.
Here is what I believe: people who are trying to save money do go where they can get the best price, especially when we’re talking about big ticket items. That means factoring in taxes, the cost of gas to get to the store and base prices. Someone might not think about these things when buying a pack of gum. But in our mission to be problem solvers, we have to wonder what causes a person to go to a drugstore in Massachusetts or Connecticut in the first place.
That’s where rebranding could come in handy. I have introduced a bill to lower the sales tax to a reasonable 6.25 percent – on par with our neighbor Massachusetts – and use a portion of the revenue from the sales tax to repair and maintain the most essential elements of our state’s infrastructure: highways and roads. This isn’t just about passing some sort of reform to help our taxpayers save money. If this legislation is enacted, it has the ability to change the image of our state. Essentially, we’re putting a “Welcome” sign on our front lawn. I think we need to drive the point home that we are willing to stay competitive, adapt to an ever-changing economy and rebuild the areas that are in such dire need of a stronger foundation. If we can change the mindset of the consumers in our own state, we can absolutely change the perception of Rhode Island from the outside. We just need to make a few bold moves while keeping in mind the economic realities we face. With no issue taking priority over fixing our economy, I think it is finally time to answer the sales tax question.
The second part of my bill ensures that the first $25 million we make from the portion of the tax that comes from internet sales go toward the Rhode Island highway maintenance account. This piece of the legislation is contingent upon the United States Congress passing the Marketplace Fairness Act, which would grant individual states the authority to compel online retailers to collect sales tax like local retailers.
We are losing massive amounts of federal dollars for infrastructure each year because our leaders on the national stage are making really tough decisions that affect our economic health in Rhode Island. It may seem very basic to some, but taking care of our roads plays a huge role in our image as a tourist destination, a business-friendly state and, in general, a place where people want to live, work and go to school. If we want to be all of those things, attracting business is key. We need to fix our roads so that commerce can flow without inhibition.
Once we come to a point of pre-recession stability, then we can talk about moving some of that money over to our much-needed social services and other important budget items. But most importantly, it is vital to the survival of this state to reinvest in the two things that provide our foundation for everything: business and infrastructure.
Mia A. Ackerman (email@example.com) is a Rhode Island State Representative, a Democrat, who represents District 45 in Cumberland and Lincoln.