Moore: Rhode Island Needs a Holiday!
Monday, December 28, 2015
Picking on the Rhode Island General Assembly is somewhat our state pastime here in Little Rhody.
Walk into any breakfast joint in the morning, turn on talk radio, or gather round with relatives at the dinner table and undoubtedly, if you give yourself more than a half hour, the topic of conversation will turn to the futility of our lawmakers.
I'm probably as guilty of it as anyone. But every once in a while, and I know people aren't going to believe me, but they do come up with some good ideas now and then.
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One such great idea came across my desk last week in the form of a press release from Warwick State Representative Joseph Solomon Jr. Solomon is filing legislation that will create a "sales tax holiday" throughout the state next year, which will take place over the weekend of August 6-8th.
“I’m tired of seeing people leave the state to purchase goods in Massachusetts. I want to see people from other states coming here to make their retail purchases. This is a perfect concept for a small state like Rhode Island where two separate states are within a short driving distance," Solomon said in his press release.
Solomon is spot on. To quote the greatest female pop star of all time (Madonna), RI needs a holiday. The sales tax holiday would not only convince people to make purchases that they need, it would convince people to make purchases that are merely conveniences as well. And the economic multiplier effect would be significant.
Increasing economic activity
It's reminiscent of the old joke about the wife who comes home from a sale with a new, mink coat. She proceeds to tell the husband that she "saved" one thousand dollars on the coat. The husband than inquires as to how much it cost, only to hear "four-thousand dollars".
To the benefit of the Rhode Island economy, there would be so many of those such purchases if Rhode Island goes ahead and enacts this sales tax holiday next year.
The naysayers, who seem to hate the idea of people not paying taxes, (they're the same people who have never seen a tax hike that they didn't like), complain that the sales tax holiday would deprive the state of much-needed tax revenue.
But that's the type of shortsightedness that prevents people from being able to see past the tips of their noses. Solomon said it's hard to estimate how much the state would lose in sales tax revenue since the concept has never been enacted before. But a very conservative estimate, he said, is about $5 million.
More, Not Less, Revenue
Assuming that that's the case, the creation of a sales tax holiday would pay for itself by virtue of all the free advertising and positive publicity alone. Every single year that Massachusetts does the tax free holiday, and every year I hear it talked about for weeks in the run up to it.
Further, that doesn’t take into account the increase receipts from the meal tax on those days, since people like to go out to eat after shopping, and gas tax receipts, since it would draw in people from other states—not to mention the fact that people will need to drive to the stores.
Solomon points out that the time is ripe for the state to be more aggressive in its economic development efforts.
"I can understand that this concept is a tough sell when we're dealing with budget deficits and pension shortfalls," said Solomon during a telephone conversation on Saturday. "But the fact of the matter is we ran a surplus last year, so we have the luxury of making investments and providing incentives for economic development."
A Rally Cry
If the sales tax holiday isn't a success, the state could always scrap the idea in future years. But let's face it, the sales tax holiday would be such a success that I'm willing to bet that the state would be expanding the program due to all the increased economic activity.
Solomon said he believes the bill’s prospects are relatively positive given that the House Speaker and Governor are looking to increase economic development. The bill stands a better chance, he said, if people rally behind it and call on their legislators to pass it.
“If people really get behind this and make it known that they are, I believe it will pass,” said Solomon.
Russell J. Moore has worked on both sides of the desk in Rhode Island media, both for newspapers and on political campaigns. Send him email at [email protected]. Follow him on twitter @russmoore713.
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