12/7/11

Chafee Still Intent on Sales Tax Expansion

Despite higher revenue in hand and improved revenue projections for the state, Governor Chafee is still set on imposing a broadened state sales tax on all of us, even though his first proposal to do so was quickly and sweepingly rejected by the General Assembly earlier this year. In an interview last month with the Warwick Beacon, Chafee indicated that he would revive the sales tax plan for the next state budget, even as he acknowledged it will be a “politically difficult thing to do.” Déjà vu, the Governor wants to broaden the tax and lower it to six percent.

“We don’t know what the economy is going to do,” he told Beacon Publisher John Howell. “It can go and it can go down and sometimes you’ve embarked on spending programs that revenue won’t support.”

Perhaps the Governor foresees an inevitable downturn in gambling revenue coming out of Twin River, with the fast-track opening of a nearby racino within the next year; that would be a reasonable conclusion that needs to be dealt with, as gambling revenues from all sources (slots, lottery tickets and keno sales) represent RI’s third most significant revenue source.

But broadening the sales tax will be another tough sell, and will be vigorously opposed by businesses and residents alike. There’s got to be a better way than hiking taxes to pay for state government.