Raimondo’s “Nickel and Diming” Criticized by Wall St. Journal — and Businesses in RI
Tuesday, February 26, 2019
Rhode Island Governor Gina Raimondo’s Fiscal Year 2020 budget proposal is coming under increased scrutiny — and not just from Rhode Islanders.
After Raimondo’s proposed beach and campground increase was called a “regressive tax on the poor” by politicians and economists in Rhode Island, the Wall Street Journal called out Raimondo in its recent editorial, “Nickel and Diming Democrats,” after Connecticut Governor Ned Lamont introduced truck tolls to address the state’s fiscal issues.
“From coast to coast, they’re taxing anything that moves,” wrote the WSJ Editorial Board.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTThe WSJ went on to write:
Mr. Lamont drew his toll inspiration from Rhode Island Gov. Gina Raimondo, who has lately been scrounging for cash to finance “free college,” universal preschool and Medicaid. Last month she proposed extending the state 7% sales tax to Netflix , e-books, iTunes, interior decorating, landscaping, shooting ranges, beach parking and more.
She also wants to reimpose the ObamaCare penalty for individuals without health insurance. And she’d create a new $1,500 penalty on large “for-profit” employers for each employee who enrolls in Medicaid. This new tax is loosely based on legislation proposed by Bernie Sanders and would essentially punish businesses for hiring low-income workers.
Ms. Raimondo did yeoman work eight years ago fixing the state’s public pensions, so it’s a shame she’s now driving off businesses like Democrats in Connecticut and Illinois.
As the Rhode Island General Assembly this week takes up budget articles in committee — including changes to Article 5, which relates to “taxes, revenues, and fees” — Rhode Islanders are speaking out about the impact that the tax increases could have on their businesses — and Rhode Islanders’ lives.
Pest Control, Interior Design, Lobbying — All Proposed to Be Taxed
Beyond increasing beach fees and taxing Netflix, Raimondo is hitting businesses in a wide range of new ways.
Robin Garceau of Robin Garceau Interiors, who appears regularly on GoLocal LIVE to talk about design and real estate, questioned the inclusion of interior design under taxable services — as highlighted by the WSJ — in Raimondo’s budget
“How does [the Governor] randomly ‘cherry pick’ the services she wants to add sales tax to? How do you add a sales tax for interior design services and not all service industries like architects, builders, landscape architects, lawyers, accountants, palm readers, painters, masons, artists, etc?” said Garceau. “It seems like a blatant slap in the face to single out our industry.”
Joe Cardoso, owner of Achieve Pest & Wildlife Solutions in Lincoln spoke to Raimondo’s proposal for a 7% commercial tax on his business.
“Rhode Island is a state that doesn’t have mandatory pest inspections,” said Cardoso. “We do integrated pest management, which means we do everything from preventions through solutions.”
“This tax will go both ways. It will get passed on to us, and we’ll, in turn, have to pass it on [to the consumer],” said Cardoso. “It will raise the price of service, and now some might not get the service. Now this means business employees will buy pesticides online and put them down in a hazardous way.”
Cardoso said that has been in contact with “someone one in Washington, D.C.” in the industry to potential lobby on the industry’s behalf.
Lobbying services, however, are also subject to taxation under the Raimondo budget proposal.
“Unlike other current taxable services, a lobbying services tax is a levy on the exercise of political speech, a quintessential First Amendment activity. While the state may have the right to reasonably treat certain First Amendment-related activity as taxable as part of a broader tax scheme, we believe it becomes much more questionable when it is singled out among a very small group of other “services” subject to the tax,” said Steve Brown with the Rhode Island American Civil Liberties Union. “Put another way, placing a potentially significant price tag on engaging in free speech for hire is problematic when the vast majority of other employment-related services are not subject to the same tax.”
“We fully appreciate the state’s need to balance the budget and find alternative revenue streams to meet that goal,” added Brown. “However, we do not believe a special tax on First Amendment activities is an appropriate way to do so.”
The language of Raimondo’s budget proposal has some lawmakers and Rhode Islanders concerned that any dues-paying organization (“dues paid to any association, club, or organization regardless of the purpose for which dues are paid”) could fall under the category of services subject to “service charges,” but the administration said that is not the case.
“At this point, the language makes it look like it applies to all clubs,” said State Representative Bob Quattrocchi (R-District 41). “A lot of times things are vague until they get into committee.”
The Raimondo administration refuted the interpretation, however.
“That definition change…only applies to the services listed in that section of the budget article under subsection c,” said Brenna McCabe with the Rhode Island Department of Administration on Monday. “It is not a new tax on clubs, such as Rotary Clubs.
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