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Rhode Island Ranked #2 in States that Bet on Big Sin

Friday, June 28, 2013


Rhode Island is the #2 state in the country that "bets on big sin," according to report issued this week on bloomberg.com -- and taxes accordingly.  

The website listed the top twelve states with the greatest percentage of total tax revenue derived from "sin", including tobacco, alcohol, and parti-mutuels, as provided by the State Government Tax Collections Survey of the U.S. Census Bureau.  

The survey did not include taxes from gambling, prostitution (where legal) and other vices because state governments account for such tax revenue in multiple ways, according to the Census Bureau.

Using the data collected, Rhode Island's "sin taxes" as a percentage of revenue in 2012 amounted to 5.16%, for a total "sin tax revenue" of $144.6 million for the year.  

"This report is just another example of the state's over-the-top dependency on tax revenue," said Lisa Blais with OSTPA, a taxpayer advocacy group in the state. "Cuts is a four letter word in the littlest state in the union."

The only state that came ahead of Rhode Island in the rankings was New Hampshire, which had "sin taxes" listed as a percentage of revenue at 10.2%.

Following Rhode Island in the list compiled by Bloomberg were South Dakota, Texas, Montana, Washington, Michigan, Oklahoma, Pennsylvania, Wisconsin, Maine, and Delaware.

RI: 2nd Highest in Country in Cigarette Tax - and 40th in "Keeping Kids from Tobacco"

The Bloomberg report released this week stated that "sin taxes" have risen in Rhode Island 31.1% in the past decade -- and that the state's cigarette tax of $3.50 per pack ranks as second highest in the country after New York's.

However, the Campaign for Tobacco Free Kids last December ranked Rhode Island as 40th in the country in "funding programs to prevent kids from smoking and helping smokers quit."

The anti-smoking advocacy group reported that in 2012, Rhode Island would collect $185 million in revenue from the 1998 tobacco settlement as well as tobacco taxes, but would spend just 0.2 percent of it on tobacco prevention programs.

According to their data, Rhode Island currently spends $376,437 a year on tobacco prevention and cessation programs, which is 2.5 percent of the $15.2 million recommended by the U.S. Centers for Disease Control and Prevention (CDC).

"People often ask, what are tobacco prevention programs?" said Danny McGoldrick, Vice President of Research for the Campaign for Tobacco Free Kids in Washington, D.C. "They include media awareness campaigns, supporting community based programs, and providing assistance and encouragement to smokers trying to quit."

"With tobacco taxes, we've seen increasing prices as an effective way to reduce smoking, especially among youth as it's a bigger percentage of their income," said McGoldrick. "So we praise Rhode Island for taking that step."

"However, Rhode Island could do far better if they made a greater investment in funding programs for prevention and cessation. The CDC's recommendation isn't even 10% of what the state takes in from the tax and settlement money.  There's a fairness element here. Smokers are paying this tax...they should get something in return," said McGoldrick.  

Alcohol Taxes Addressed in this Year's Budget

The state FY2014 budget approved this week by the General Assembly contained a provision that beginning on December 1st of this year, there will be no sales tax imposed on alcohol purchases for at least two years. 

The elimination of the sales tax on wine and liquor -- but not beer -- will remain in place through June 30, 2015.

“This is a win for the consumer as well as those liquor stores which have lost a lot of business to their competitors in Massachusetts,” said Rep. Jan P. Malik (D-Dist. 67, Barrington, Warren), who worked to eliminate the sales tax on liquor in Rhode Island as a way to “level the playing field for Rhode Island’s small businesses.”  

However, the sales tax elimination is coupled with an increase on the excise tax for beer, wine, and spirits from July 1 of this year through March 13, 2015. The excise tax on beer will rise from $3 to $3.30 per barrel, from 60 cents to $1.40 per gallon for wine, and from $3.75 to $5.40 per gallon of spirits.

According to the press release sent out by the General Assembly on Thursday, it is anticipated those changes could result in a revenue loss of about $1.2 million for the new fiscal year, "barring an increase in sales volume in Rhode Island."  

Contradictory Policies?

OSTPA's Blais offered her further assessment of taxes in Rhode Island -- and the "sin taxes" in particular.

"The contradiction in this state is mind-boggling. Many I'm sure remember the days when the conventional wisdom was, "We don't gamble in RI" -- unless, of course, Rhode Island owns a piece of it. Same goes for medical marijuana - it's okay as long the state gets a cut."

"Now, with the anticipated roll-out of the Health Exchange Exchange, we all hear about responsibility for healthy behavior to lower insurance premiums. Yet, our state's budget leans heavily on the outrageous tax revenue imposed on cigarettes," said Blais.  


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