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Opponents Blast Online Retail Tax for Hurting RI Businesses

Wednesday, May 20, 2015

Kate Nagle, GoLocal Contributor

A battle over online retail taxes is emerging in RI.

Legislation introduced to abolish Rhode Island's "Amazon Tax" rule has set up a battle between supporters who say the tax has hurt hundreds of Rhode Island businesses and millions in local income -- and opponents who say the rule provides for parity between brick and mortar companies and online retailers.

A "tri-partisan" group of Rhode Island State Representatives, which includes House Republicans Brian Newberry, Doreen Costa, Daniel Reilly, Independent Blake Filippi, and Democrat and Deputy Majority Whip Chris Blazejewski introduced legislation (H 5719) to repeal the rule, which they say has not generated any sales tax receipts for the state since its inception in 2009 -- and has instead caused large retailers, including Amazon and Overstock, to sever all their affiliate relationships with Rhode Island businesses.

“In efforts to garner more sales tax receipts, Rhode Island effectively cut off every business in the state from entering into affiliate relationships with the largest online retailers in the nation; stifling the high-tech industries technology we must embrace,” said Filippi.

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"Little Known Law" at Play

According to Filippi, the rule, dubbed the Amazon Tax, was established in Rhode Island 2009 with the intent to generate more state revenue by assessing sales tax against large online retailers shipping products into the state. The tax works by redefining the presence of a retailer. Pursuant to the rule, companies that ship products into Rhode Island would be subject to collect and remit Rhode Island sales taxes if they are linked to a local company’s website. This “click through nexus” is sufficient under Rhode Island law to assert sales tax jurisdiction over out of state companies.

Filippi said that before the Amazon Tax was passed, approximately 800 Rhode Island businesses were affiliated with online retailers, which generated $57 million in local income, and $4 million in income taxes.

“This tax has probably cost the general fund," said Filippi. “All businesses that had relationships with Amazon and Overstock.com lost that relationship and the income that went with it. The Amazon Tax has been all cost and no benefit.”

Former Director of Administration and head of the Rhode Island Public Expenditure Council Gary Sasse said that the state had collectibles from the "Amazon Tax" -- which Filippi countered

"The Amazon tax is applicable to all remote sellers doing business in Rhode Island. Testimony provided at the May 2015 Revenue Estimating Conference by the Division of Taxation noted that the state currently had collectable of $850,000 against remote sellers, which they are in the process of try to collect," said Sasse. "Amazon currently collects use taxes on shipments to state were they have a physical presence. This involves 24 states of which Mass and Conn are included, RI is not."

"We believe that figure includes UBER and Lyft sales taxes. Our intent is not to include ride sharing," said Filippi in response. "Both the Division of Taxation and the Department of Revenue confirmed $0 in click-thru nexus sales tax collections."

Proponents, Opponents Line Up

Speaker of the House Nicholas Mattiello is on the record in opposition to the proposal to abolish the "Amazon Tax."

“He does not support this legislation, because he believes there should be parity amongst retail methods; brick and mortar stores in Rhode Island shouldn’t be at an artificial disadvantage," said Larry Berman, Mattiello's spokesman. "At least ten other states, including Connecticut and Maine, have similar law."

Taxpayer groups, however, decried the "nickel and dime" approach by state government.

"If these Amazon Tax costs are levied on them during their normal course of business, it is probably minor as a % of their costs. That said, the Rhode Island business community is being nickeled and dimed to death which has garnered our state the reputation of being one of the highest taxed in the US," said Larry Girouard with the advocacy group RI Taxpayer. "These taxes and fees only add to Rhode Island’s “well earned” brand as being the most hostile in the continental United States. Only Hawaii is a worse brand."

"It is always a penny here (the gas tax increase), a nickel there, etc that continues with the tax creep. The corporate tax reduction last year was significant, but in the face of budgets that are never driven down, the income stream must be made up somehow," continued Girouard. "The fiscal solution for Rhode Island is not about squeezing more monies from the taxpayers (individual taxpayers and businesses), but is all about delivering a higher quality product with the money they already have."

"This tax was nothing more than yet another blatant revenue grab. Like other bad tax ideas, it results in the unintended consequence of stifling economic growth and jobs and further harming our state's business climate," said Rhode Island Center for Freedom and Prosperity's Mike Stenhouse. "As our Center argued during the zero sales tax debate, tax cuts stimulate economic growth. Recently released data from the RI Department of Revenue show that eliminating the wine and spirits tax a few years ago resulted in a 13.4% year-year increase in industry sales. This lower-tax direction is where we should be heading as a state."

Rhode Island Business on Record

Ross-Simons's Vice President of Marketing Larry Davis explained how similar rules on other state forces the jewelry company to pull out of those locations.

"Ross-Simons has physical Nexus in RI, so Rep. Filippi’s legislation will not affect Ross-Simons. We collect RI sales tax on behalf of the state for all shipments made to RI because we have stores and our headquarters here. In fact we believe that all companies that have physical nexus ought to collect the sales tax on behalf of the state because we use the state service’s to help support our business," said Davis.

"However, we applaud Rep. Filippi’s efforts on behalf of entrepreneurship in RI -- as we have taken the exact actions that the [he] describes in other states. When NY passed a similar sales tax law, which stated that affiliate marketing establishes “virtual” nexus for e-commerce companies, we immediately delisted all of our affiliates in NY. And we have taken the action in a host of other states including Illinois, VT, etc. When states created the bogus concept of “virtual nexus,” many e-commerce companies did what we did -- they just fired all their affiliates in those states. They feel, as we do, that for us to collect taxes where we don’t use the state services and we don’t know the state laws is a real barrier to commerce," continued Davis.

"It is simply wrong to think that just because Ross-Simons does business with a company in NY, that we have a presence in NY because that’s where our vendor is located," said Davis. "We no more have an office in New York than we have in South Africa, which is where so many of our diamonds come from. An affiliate is just another vendor to us, but the states singled out this particular vendor relationship – the “affiliate” relationship -- in an effort to build phony nexus and force us to collect taxes on their behalf."

Related Slideshow: The Highest Taxed Communities for 2015

How do the taxes in your community compare to other cities and towns in Rhode Island?

GoLocalProv has ranked communities from the least to the highest taxed on the basis of their tax rates, using newly released data from the state Division of Municipal Finance. The below slides list the tax rate per $1,000 in value for homes, commercial property, personal property, and motor vehicles for the 2015 fiscal year, which began last July and ends next June.

Along with the rates are examples of what taxes might cost a typical resident in each city or town. For residential taxes, this calculation is based on the current statewide median price for a single family home, which is $215,000. For communities with them, homestead exemptions are factored in using the latest available figures. For motor vehicles, the example used is a 2008 Honda Accord, valued at the maximum retail price of $15,150. The total cost of home and car taxes is then represented as a percentage of the median income for that community, offering a rough measure of how affordable taxes are for those residents as compared with the taxes in another city or town.

Data sources: the Rhode Island Division of Municipal Finance, the Rhode Island Association of Realtors, the Rhode Island League of Cities and Towns, the National Automobile Dealers Association, and the U.S. Census Bureau.

#39 New Shoreham

FY 2015 Tax Rates Per $1,000 in Value

Residential: $5.34

Commercial: $5.34

Personal Property: $5.34

Motor Vehicle: $9.75

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $1,148.10

For a 2008 Honda Accord: $147.71

Total Taxes as a % of Median Income:1.43%

Note: Real property is assessed at 80 percent of value. This is reflected in the community's ranking.

#38 Little Compton

FY 2015 Tax Rates Per $1,000 in Value

Residential: $5.64

Commercial: $5.64

Personal Property: $11.28

Motor Vehicle: $13.90

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $1,212.60

For a 2008 Honda Accord: $210.59

Total Taxes as a % of Median Income: 1.56%

#37 Jamestown

FY 2015 Tax Rates Per $1,000 in Value

Residential: $8.75

Commercial: $8.75

Personal Property: $8.75

Motor Vehicle: $14.42

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $1,881.25

For a 2008 Honda Accord: $218.46

Total Taxes as a % of Median Income: 2.46%

#36 Charlestown

FY 2015 Tax Rates Per $1,000 in Value

Residential: $9.90

Commercial: $9.90

Personal Property: $9.90

Motor Vehicle: $13.08

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $2,128.50

For a 2008 Honda Accord: $198.16

Total Taxes as a % of Median Income: 3.20%

#35 Bristol

FY 2015 Tax Rates Per $1,000 in Value

Residential: $13.06

Commercial: $13.06

Personal Property: $13.06

Motor Vehicle: $17.35

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $2,807.90

For a 2008 Honda Accord: $262.85

Total Taxes as a % of Median Income: 5.04%

Note: Bristol had a revaluation or statistical update effective December 31, 2013

#34 Narragansett

FY 2015 Tax Rates Per $1,000 in Value

Residential: $10.04

Commercial: $15.06

Personal Property: $15.06

Motor Vehicle: $16.46

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $2,158.60

For a 2008 Honda Accord: $249.37

Total Taxes as a % of Median Income: 3.58%

#33 Westerly

FY 2015 Tax Rates Per $1,000 in Value

Residential: $10.64

Commercial: $10.64

Personal Property: $10.64

Motor Vehicle: $29.67

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $2,287.60

For a 2008 Honda Accord: $449.50

Total Taxes as a % of Median Income: 4.64%

#32 Portsmouth

FY 2015 Tax Rates Per $1,000 in Value

Residential: $15.80

Commercial: $15.80

Personal Property: $15.80

Motor Vehicle: $22.50

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $3,397.00

For a 2008 Honda Accord: $340.88

Total Taxes as a % of Median Income: 5.10%

Note: Motor vehicles are assessed at 70 percent of value. This is reflected in the community's ranking.

#31 South Kingstown

FY 2015 Tax Rates Per $1,000 in Value

Residential: $15.48

Commercial: $15.48

Personal Property: $15.48

Motor Vehicle: $18.71

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $3,328.20

For a 2008 Honda Accord: $283.46

Total Taxes as a % of Median Income: 4.91%

#30 Newport

FY 2015 Tax Rates Per $1,000 in Value

Residential: $12.06

Commercial:$16.72

Personal Property: $16.72

Motor Vehicle: $23.45

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $2,592.90

For a 2008 Honda Accord: $355.27

Total Taxes as a % of Median Income: 5.11%

#29 Middletown

FY 2015 Tax Rates Per $1,000 in Value

Residential:$16.07

Commercial: $21.34

Personal Property: $16.07

Motor Vehicle: $16.05

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $3,455.05

For a 2008 Honda Accord: $243.16

Total Taxes as a % of Median Income: 5.23%

#28 Exeter

FY 2015 Tax Rates Per $1,000 in Value

Residential: $14.63

Commercial: $14.63

Personal Property: $14.63

Motor Vehicle: $32.59

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $3,145.45

For a 2008 Honda Accord: $493.74

Total Taxes as a % of Median Income: 3.82%

#27 Tiverton

FY 2015 Tax Rates Per $1,000 in Value

Residential: $19.30

Commercial: $19.30

Personal Property: $19.30

Motor Vehicle: $19.14

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $4,149.50

For a 2008 Honda Accord: $289.97

Total Taxes as a % of Median Income: 6.46%

#26 North Kingstown

FY 2015 Tax Rates Per $1,000 in Value

Residential: $18.91

Commercial: $18.91

Personal Property: $18.91

Motor Vehicle: $22.04

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $4,065.65

For a 2008 Honda Accord: $333.91

Total Taxes as a % of Median Income: 5.49%

#25 Richmond

FY 2015 Tax Rates Per $1,000 in Value

Residential: $20.94

Commercial: $20.94

Personal Property: $20.94

Motor Vehicle: $22.64

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $4,502.10

For a 2008 Honda Accord: $343.00

Total Taxes as a % of Median Income: 5.88%

Notes:

1. Motor vehicles are assessed at 80 percent of value. This is reflected in the community's ranking

2. Richmond had a revaluation or statistical update effective Dec. 31, 2013

#24 Hopkinton

FY 2015 Tax Rates Per $1,000 in Value

Residential: $20.64

Commercial: $20.64

Personal Property: $20.64

Motor Vehicle: $21.18

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $4,437.60

For a 2008 Honda Accord: $320.88

Total Taxes as a % of Median Income: 7.13%

Note: Hopkinton had a revaluation or statistical update effective Dec. 31, 2013

#23 Cumberland

FY 2015 Tax Rates Per $1,000 in Value

Residential: $17.08

Commercial: $17.08

Personal Property: $29.53

Motor Vehicle: $19.87

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $3,672.20

For a 2008 Honda Accord: $301.03

Total Taxes as a % of Median Income: 5.42%

Note: Cumberland had a revaluation or statistical update effective Dec. 31, 2013

#22 Coventry

FY 2015 Tax Rates Per $1,000 in Value

Residential: $20.40

Commercial: $24.58

Personal Property: $20.40

Motor Vehicle: $18.75

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $4,386.00

For a 2008 Honda Accord: $284.06

Total Taxes as a % of Median Income: 7.12%

Note: Coventry had a revaluation or statistical update effective Dec. 31, 2013

#21 Warren

FY 2015 Tax Rates Per $1,000 in Value

Residential: $20.07

Commercial: $20.07

Personal Property: $20.07

Motor Vehicle:$26.00

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $4,315.05

For a 2008 Honda accord: $393.90

Total Taxes as a % of Median Income: 8.62%

#20 East Greenwich

FY 2015 Tax Rates Per $1,000 in Value

Residential: $23.26

Commercial: $23.26

Personal Property: $23.26

Motor Vehicle: $22.88

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $5,000.90

For a 2008 Honda accord: $346.63

Total Taxes as a % of Median Income: 5.48%

#19 Burrillville

FY 2015 Tax Rates Per $1,000 in Value

Residential: $18.88

Commercial: $18.88

Personal Property: $18.88

Motor Vehicle: $40.00

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $4,059.20

For a 2008 Honda Accord: $606.00

Total Taxes as a % of Median Income: 7.01%

#18 Barrington

FY 2015 Tax Rates Per $1,000 in Value

Residential: $18.30

Commercial: $18.30

Personal Property: $18.30

Motor Vehicle: $42.00

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $3,934.50

For a 2008 Honda Accord: $636.30

Total Taxes as a % of Median Income: 4.43%

#17 West Greenwich

FY 2015 Tax Rates Per $1,000 in Value

Residential: $22.55

Commercial: $22.55

Personal Property:$33.85

Motor Vehicle: $19.02

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $4,848.25

For a 2008 Honda Accord: $288.15

Total Taxes as a % of Median Income: 6.36%

Notes:

1. Does not include rate for vacant land which is $16.07

2. West Greenwich has a homestead exemption

3. West Greenwich had a revaluation or statistical update effective Dec. 31, 2013

#16 Foster

FY 2015 Tax Rates Per $1,000 in Value

Residential: $21.06

Commercial: $21.06

Personal Property: $28.96

Motor Vehicle: $36.95

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $4,527.90

For a 2008 Honda Accord: $559.79

Total Taxes as a % of Median Income: 6.26%

#15 Scituate

FY 2015 Tax Rates Per $1,000 in Value

Residential: $18.98

Commercial: $21.94

Personal Property: $40.38

Motor Vehicle: $30.20

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $4,080.70

For a 2008 Honda Accord: $457.53

Total Taxes as a % of Median Income: 5.52%

Note: Motor vehicles are assessed at 95 percent of value. This is reflected in the community's ranking.

#14 North Smithfield

FY 2015 Tax Rates Per $1,000 in Value

Residential: $16.02

Commercial: $17.77

Personal Property: $42.80

Motor Vehicle: $37.62

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $3,444.30

For a 2008 Honda Accord: $569.94

Total Taxes as a % of Median Income: 5.21%

#13 Glocester

FY 2015 Tax Rates Per $1,000 in Value

Residential: $21.77

Commercial: $24.74

Personal Property: $43.34

Motor Vehicle: $24.37

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $4,680.55

For a 2008 Honda Accord: $369.21

Total Taxes as a % of Median Income: 6.31%

Note: Glocester had a revaluation or statistical update effective Dec. 31, 2013

#12 Lincoln

FY 2015 Tax Rates Per $1,000 in Value

Residential: $23.57

Commercial: $26.94

Personal Property: $37.02

Motor Vehicle: $30.66

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $5,067.55

For a 2008 Honda Accord: $464.50

Total Taxes as a % of Median Income: 7.33%

Note: Lincoln Has a homestead exemption.

#11 Warwick

FY 2015 Tax Rates Per $1,000 in Value

Residential: $20.06

Commercial: $30.09

Personal Property: $40.12

Motor Vehicle: $34.60

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $4,312.90

For a 2008 Honda Accord: $524.19

Total Taxes as a % of Median Income: 7.93%

#10 West Warwick

FY 2015 Tax Rates Per $1,000 in Value

Residential:

For apartments with 6+ units: $36.28
For Two to Five Family buildings: $36.45
For Single family homes: $25.3

Commercial: $30.85

Personal Property: $40.13

Motor Vehicle: $28.47

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $5,458.85

For a 2008 Honda Accord: $431.32

Total Taxes as a % of Median Income: 11.46%

Note: For rankng purposes, an average of the three residential rates was used.

#9 Smithfield

FY 2015 Tax Rates Per $1,000 in Value

Residential: $17.13

Commercial: $17.13

Personal Property: $59.70

Motor Vehicle: $39.00

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $3,682.95

For a 2008 Honda Accord: $590.85

Total Taxes as a % of Median Income: 5.89%

#8 Cranston

FY 2015 Tax Rates Per $1,000 in Value

Residential: $22.84

Commercial: $34.26

Personal Property: $34.26

Motor Vehicle: $42.44

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $4,910.60

For a 2008 Honda Accord: $642.97

Total Taxes as a % of Median Income: 9.45%

#7 East Providence

FY 2015 Tax Rates Per $1,000 in Value

Residential: $22.95

Commercial: $25.40

Personal Property: $56.67

Motor Vehicle: $37.10

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $4,934.25

For a 2008 Honda Accord: $562.07

Total Taxes as a % of Median Income:11.09%

Notes:

1. Rates are for FY 2014

2. East Providence has homestead exemptions

#6 Johnston

FY 2015 Tax Rates Per $1,000 in Value

Residential: $28.75

Commercial: $28.75

Personal Property: $59.22

Motor Vehicle: $41.46

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $6,181.25

For a 2008 Honda Accord: $628.12

Total Taxes as a % of Median Income: 11.99%

Note: Johnston has homestead exemptions

#5 Pawtucket

FY 2015 Tax Rates Per $1,000 in Value

Residential: $23.06

Commercial: $30.88

Personal Property: $52.09

Motor Vehicle: $53.30

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $4,957.90

For a 2008 Honda Accord: $807.50

Total Taxes as a % of Median Income: 14.28%

#4 Woonsocket

FY 2015 Tax Rates Per $1,000 in Value

Residential: $35.94

Commercial: $39.99

Personal Property: $46.58

Motor Vehicle: $46.58

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $7,727.10

For a 2008 Honda Accord: $705.69

Total Taxes as a % of Median Income: 21.99%

Note: Woonsocket has homestead exemptions

#3 North Providence

FY 2015 Tax Rates Per $1,000 in Value

Residential: $27.94

Commercial: $34.68

Personal Property: $69.91

Motor Vehicle: $41.95

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $6,007.10

For a 2008 Honda Accord: $635.54

Total Taxes as a % of Median Income: 13.04%

Notes:

1. North Providence has homestead exemptions

2. North Providence had a revaluation or statistical update effective Dec. 31, 2013

#2 Providence

FY 2015 Tax Rates Per $1,000 in Value

Residential:

For owner-occupied residential property: $19.25
For non-owner-occupied residential property: $33.75

Commercial: $36.75

Personal Property: $55.80

Motor Vehicle: $60.00

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $4,138.75

For a 2008 Honda Accord: $909.00

Total Taxes as a % of Median Income: 13.20%

Note: For ranking purposes, the average of two residential rates was used

#1 Central Falls

FY 2015 Tax Rates Per $1,000 in Value

Residential: $27.26

Commercial: $39.48

Personal Property: $73.11

Motor Vehicle: $48.65

Tax Cost for Residents

Taxes for a Single Family Home Valued at $215,000: $5,860.90

For a 2008 Honda Accord: $737.05

Total Taxes as a % of Median Income: 22.54%

Note: Central Falls has homestead exemptions

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