Tax initiatives will put Rhode Island back on track
Rhode Island’s economy has been a bloodied battleground these last few years. In that time, the General Assembly has been working to attack every facet of our economic troubles in various ways. I took office primarily to join this fight against unemployment after seeing the poor and vulnerable people of Woonsocket and Cumberland suffer at the hands of a monstrous depression.
Since then, I have been pushing this state to lower its cigarette and gas taxes, not in order to stay competitive but in order to be competitive. It’s looking like the choices of our neighbors are going to bode well for our economic goals.
Let’s start with Massachusetts. The Bay State raised its excise cigarette taxes this year from $2.51 to $3.51 per pack, costing Rhode Islanders 1 cent more per pack if they choose to cross the border into Massachusetts to purchase cigarettes. I know it may seem like 1 cent will not make a difference in the choice between Rhode Island and Massachusetts. But those who usually cross the border are no longer receiving the bargain they once were. According to the Dec. 9, 2013 article in the Providence Journal titled, “R.I. benefits from big hike in Mass. cigarette tax,” our state saw $2.7 million more in cigarette tax revenue between the months of August and October than was expected.
In Connecticut, our neighbors are paying more for gasoline. The state’s gross receipts tax (also known as the gas tax) has increased by 4 cents per gallon. Additionally, its diesel tax has increased by 3.5 cents per gallon. In April of this year, the American Petroleum Institute (API) released a report that would place Connecticut’s state gas taxes among the highest in the entire nation after the increase. This is because while the state’s flat gasoline tax is 25 cents per gallon, Connecticut also collects an additional gasoline tax at the wholesale level.
Where does that leave Rhode Island? Our state currently charges 32 cents per gallon for gasoline tax, and Rhode Island’s cigarette tax has been $3.50 per pack since June 30, 2012 when the state raised it by 4 cents. I’ve said this before, but the person who buys cigarettes in, say, Woonsocket, is also likely to spend money on a bottle of water, a coffee, a lottery ticket or maybe even a gallon of milk. I still believe that those who argue that lowering the state’s cigarette or gasoline tax would result in a loss of state revenues are shortsighted. We must be able to attract business in the long-term. Yes, we need short-term relief in many areas of our economy. The bigger picture, however, is equally important.
In the business world, we sometimes have to spend money in order to make money. That’s what needs to happen here. Regardless of the General Assembly’s decision next year regarding those taxes, Rhode Island is officially in the game. I think that’s worth noting when we’re talking about our general economic health. There are glimmers of hope and reason here, and I understand it’s difficult to see them when we are surrounded by so much negativity and uncertainty. I don’t blame the media or the constituents or the government – it is what it is. We are still fighting a battle, and with that will come long periods of frustration, trial and error, collaborations and the weight of our problems continually sagging down on our spirits. This is not to say that this tax news is anywhere close to the good news we want to hear about jobs and economic activity. But can we just take a moment to note how we’ve been able to take one step up the ladder? Life is a series of little movements, and we must pause to appreciate whatever progress we make.