Business Leaders Rip Chafee Tax Proposal
Wednesday, February 01, 2012
Business leaders lashed out at Governor Chafee’s budget proposal Tuesday, calling the plan to increase the meals and beverage tax shortsighted and suggesting that in the long run, revenues will plummet because people will be hesitant to dine out and more importantly, convention planners will be scared away from the state.
Chafee hopes to generate about $76 million in the plan, which includes:
• Increasing the meals and beverage tax from 1% to 3%.
• Expanding the lodging tax to include rentals of vacation homes and bed and breakfasts.
• Taxing clothing that costs more than $175.
• Expanding the sales and use tax to include limos and taxi services, moving, storage, warehousing and freight services, pet services and car washes.
• $7.2 million in additional tobacco taxes.
“We feel a little bit like we're being targeted,” said Robert Bacon, owners of Gregg’s restaurants. “It’s unfair and shortsighted.”
Servers Will be Most Affected
Bacon said the restaurant industry has experienced skyrocketing food costs over the last two years but has generally avoided raising menu prices to keep customers happy. He said another tax would significantly cut into profit margins.
“In the face of all those price increases we faced as an industry, we've had very minimal price increases on our menu,” Bacon said. “We didn't feel our clientele would tolerate it. If I felt my customers could afford two percent, I’d have done it.”
Ultimately, Bacon said, one group will be affected more than anyone: Servers.
“You know who is really going to suffer? The server,” Bacon said. “People are going to tip on the net [price].”
RI Hospitality Association: We'll Fight This
Dale Venturini, President and CEO of the RI Hospitality Association, agreed with Bacon. She said her group will immediately begin lobbying against the proposed taxes.
“I’m hearing a lot of frustration I had over 400 emails this morning,” she said. “People are on edge. I feel so bad.”
Venturini continued: “I think the real issue I’m hearing the most of is that if [restaurants] thought the customer had an appetite for increasing prices, they would have increased prices. They feel this is another increase without it ever coming back to them.”
RISC: Cost of Living Getting Higher
Rhode Island Statewide Coalition Executive Director Harriet Lloyd said her concern is that the tax and fee increases in the Governor’s plan will affect everyday Rhode Islanders.
“This budget proposal may not be pursuing as many new taxes as last year’s did, but it represents higher costs on Rhode Islanders for everyday spending like restaurant meals, larger purchases of clothes, and even bridge crossings,” she said. “Taken together, it means the cost of everyday life in Rhode Island just keeps getting higher.”
Additional Taxes Will Set Us Back
In a statement sent out prior to the Governor’s address, the Rhode Island Manufacturers Association (RIMA) said it was “cautiously optimistic” about Chafee’s call to focus on “reform before revenue” regarding the projected $120 million budget deficit for 2013. But the organization said remains vigilant in its opposition to any new sales or income taxes as a solution to the state’s fiscal challenges.
“Rhode Island has taken a number of positive steps in recent years and the enactment of comprehensive pension reform is another major step in righting our fiscal ship,” RIMA Chairman Al Lubrano said.” However, imposing additional tax burdens on businesses, individuals, and most importantly manufacturers will only serve to set us back. If the Governor or any other elected officials want to see manufacturing grow in our state, they need to focus on the expense side of the ledger. Adding more burdens to businesses will only perpetuate a downward spiral. We believe that providing a climate that allows Rhode Island manufacturers to successfully compete on the global stage will increase jobs in our state and, in turn, increase the revenue base.”
Complete Budget Breakdown
- Chafee’s Budget: A Win for Education
- Chafee’s Budget: A Commitment to Municipalities
- Chafee’s Budget: $200 Million in Ballot Proposals
- Chafee’s Budget: A Tax Amnesty Period
- Chafee’s Budget: Cuts in Health and Human Services
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