Tax-free holiday may help boost economy
A recent survey of local business owners and consumers by the Newport Daily News (Local businesses, consumers think tax break is good idea, March 19, 2009) gives us a glimpse into the need for the passage of House bill 5471, that I have proposed, that would establish a tax-free holiday in Rhode Island. My colleague, Senator Lou DiPalma (District 12) is introducing the Senate version.
The reporter's story details a consensus between the two groups that setting aside a day to encourage sales without the 7 percent tax would help our economy. I believe a Rhode Island tax-free holiday may be the tipping point we need to boost retail sales and build consumer confidence.
My bill would exempt the 7 percent sales tax on products up to $2,500 and fall on the third weekend in August, pre-empting Massachusetts' tax-free holiday scheduled for the last weekend in August. I say let's welcome our Bay State neighbors into our shops and malls with their "open wallets" instead of sending our citizens across the state line for a better deal!
We're not blazing a trail. Twenty-three states have similar tax free holidays; some two to three times a year for as long as seven days.
Consumer confidence is at an all-time low in Rhode Island, yet 90-percent of our citizens earn an income. We've got to start thinking more positively and leading more aggressively to re-invigorate our economy.
Three years ago, the House Finance Committee wouldn't consider a tax-free holiday when the economy was more robust. Opponents now fear that the economy is "so bad" that we can't afford to lose any tax revenue, and that a tax-free weekend just shifts the timing of retail purchases. Consumers are cautious. However, the timing of any purchase is insignifi cant when people are not spending at all.
I propose we change that dynamic, support our businesses, embrace the SHOP in RI mantra and give the consumer freedom from a 7-percent sales tax as an added incentive.
Small business represents 90 percent of this state's gross product; they are the lifeblood of our economy and need our patronage to stay alive.
It is incumbent on the leaders of this great state to think differently and be creative problem-solvers. I respectfully ask for a third time (twice during House Finance testimony) to vote this bill out of committee for a full debate on the House floor and then vote on it; up or down.
Sometimes, if you've always zigged, it's time to zag. I say, now is that time!
Editor's note: Deb Ruggiero is the State Representative for District 74—Jamestown/Middletown.