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Don Roach: Rhode Island Needs a Sales Tax Holiday

Wednesday, May 30, 2012

 

I’m not sure when it started, but during the last few summers Massachusetts has enacted a “sales tax holiday” in order to attract consumers to retail outlets in the state. If you’re like me, you’ve visited Seekonk and Attleboro on these days and enjoyed paying no sales tax on that new 42-inch tv. The novelty of a sales tax holiday in a neighboring state has always spurred discussion here in Rhode Island about whether or not to have a tax holiday ourselves. In the wake of the 38 Studios debacle, the state needs something to feel good about and a sales tax holiday might not be a bad idea.

It’s about the economy stupid

One of the arguments against a sales tax holiday is that it adversely affects government’s revenue. For instance, Massachusetts lost anywhere between $20 to $25 million in revenues last year due to the holiday. Obviously, with state and local governments grappling with budget deficits losing $20+ million is nothing to sneeze at. One Massachusetts Representative is not in total agreement with the holiday, however. Said Rep. Stephen Kulik, “I felt symbolically it was not appropriate to support a further reduction in state revenues after we made these difficult cuts.” People who ascribe to Kulik’s ideology are part of the problem, a major part of the problem.

Whereas the government is losing $20 to $25 million that means consumers are spending millions more on the tax holiday. I looked for figures around the increase on tax holiday days as compared with normal summer shopping days but it seems that most researchers are concerned about the decrease in government tax revenue.

Think about that for a second, when analysts review the success or failure of sales tax holidays they have focused on the government’s net revenue gain or loss.

What about consumers and retailers?

Excuse me if I care less about how government is affected by sales tax holidays than I do about how it affects consumers and retailers. If you drive down Bald Hill Road in Warwick you’ll notice that much of the office space located at various mini-malls lies vacant. From Strawberries to the Shaw’s, retailers are having a tough time in this economy.

While a tax holiday isn’t a year round respite from sales tax it does allow consumers to plan their shopping as they do on Black Friday, and retailers to align their own sales strategies with the holiday. Even if it there’s only a 3-5% spike in sales, the holiday shows consumers and retailers that government officials are cognizant of the difficulty each faces and offers a day freebie. Consumer confidence is certainly critical to the overall economy’s success and sales tax holidays can’t hurt that confidence.

Sales Tax Holiday day July 7th& 8th

Thus, I’m proposing a Rhode Island Sales Tax Holiday on July 7th and 8th. Contact your legislator and tell them you want a sales tax holiday. Tell them that if one company, 38 Studios, can receive a $75 million loan from government than the million citizens of Rhode Island deserve a tax break, however minimal. Tell them that local businesses are still smarting from the effects of the recession and need a morale pick me up and something to motivate them to stay in the state versus crossing the border. And finally tell them that the people are more important than the services government provides.

And if they don’t listen, vote in people who will this fall.

Don Roach is a member of the Rhode Island Young Republicans. Don can be reached at don@donroach.org.

 

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