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Carcieri Calls For Sales Tax Holiday

Providence Journal, Oct. 4, 2005

by Scott Mayerowitz, Journal State House Bureau

PROVIDENCE -- Governor Carcieri this afternoon called on the General Assembly to return for a special session in order to enact two of his initiatives: a state ``sales tax holiday’’ and a plan to help low-income seniors and the disabled pay their energy bills this winter.

The Republican governor is proposing a one-time waiver of the state’s 7-percent sales tax on the Saturday and Sunday immediately following Thanksgiving. The Friday after Thanksgiving, referred to in the retail world as ``Black Friday’’ is traditionally one of the busiest shopping days of the year.

Carcieri is also asking lawmakers to approve a permanent two-day sales tax holiday every August.

Sales tax is the state’s second highest source of revenue -- after personal income tax -- estimated to bring in $887.8 million this year. The state budget office estimates that a November tax holiday would cost the state about $6 million in lost taxes on $82.2 million in sales.

The August holiday would generate $72.9 million in sales, creating a tax shortfall of $5.1 million, according to budget office estimates.

During the holiday, the state would not collect sales tax on most goods costing $2,500 or less. Several items would be exempt from the holiday, including automobiles, telecommunications services, cigarettes, restaurant meals, hotel accommodations and all business-to-business transactions.

The governor argued that a sales tax holiday in late November would help retailers and consumers who are feeling the pinch of increased energy prices. A sales tax holiday would also give Rhode Island retailers the opportunity to make up for sales lost to Massachusetts retailers during Massachusetts’ sales tax holiday in August.

Last year and this year, Massachusetts held sales tax holidays, waiving its 5-percent tax.

Massachusetts has anticipated losing about $14.5 million on about $300 million in purchases during its Aug 13-14 holiday this year, according to the state Department of Revenue. Final numbers are expected in mid-December.

The governor’s office said that last year sales tax holidays were also enacted in: Connecticut; the District of Columbia; Florida; Georgia; Iowa; Missouri; New York; North Carolina; South Carolina; Texas; and New Mexico.

Lt. Gov. Charles J. Fogarty, who plans to run against Carcieri in 2006, has also supported the idea and the Providence Chamber of Commerce has said it will make tax-holiday legislation a primary initiative during the upcoming General Assembly session.

On a separate front, the governor is also asking lawmakers to consider using greater-than-expected revenues from electricity and natural gas gross earnings taxes -- a tax that Rhode Island utility consumers pay -- to create a fund to help Rhode Island senior citizens and individuals with disabilities pay their home heating bills.

The fund would supplement assistance from the federal government’s Low Income Home Energy Assistance Program (LIHEAP).

Because of rising energy prices, the federal funding is not expected to be sufficient, Carcieri said.

Currently, Rhode Island expects to receive $12.2 million in funding, down from $15.3 million last year. As a result, the number of Rhode Islanders served by the program is expected to drop from 27,000 to approximately 20,000.The funding is expected to run out by January.

Carcieri proposes taking the $3.7 million in additional utility gross earnings taxes and establishing a special emergency assistance fund for people over age 60 and individuals with disabilities that qualify for federal Social Security Insurance benefits. The average assistance would be between $375 and $650.

Calling a special session is a risk for Carcieri.

The governor vetoed several bills this year including a minimum wage increase, legislation allowing the use of marijuana to ease the pain of the seriously ill and a highly-controversial bill that would have allowed child-care workers to unionize.

If the Democrat-dominated Assembly returns, they could take up several of the measures that Carcieri has -- until now -- successfully killed off.

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Updated: Friday, October 07, 2005   ~   Accessed: 5878 times
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