Tax: RI Tax Update

Rhode Island Tax Update…

Lawmakers Seek to Slash Cigarette Tax
February 20, 2012
Dan McGowan, GoLocalProv News Editor
Rhode Island has one of the highest cigarette taxes in the nation and now several state lawmakers say they would like to make changes to compete with Massachusetts and Connecticut.
State Rep. Robert Phillips introduced legislation last week that would lower the cigarette tax by $1 per pack. The bill is cosponsored by Rep. John Edwards.
Similar to a bill he introduced last year, the bill aims to draw more revenue back into Rhode Island with competitive prices. The bill will be especially helpful for “border communities” like Woonsocket, Rep. Phillips said.
“I know we’re in a constant state of worry over trying to find more money, but critics of this bill who say decreasing the cigarette tax will have a negative effect on state revenues have a very short-sighted view of how this could help us,” the representative said. “We need to think smart about handling our cigarette tax, and that means looking at it differently than other states do. Unfortunately, we live in a small state. It’s easy to drive over the border into Massachusetts and Connecticut even if you’re not living in a border community. That’s not a problem other states have right now.”
Rhode Island’s cigarette tax has remained at $3.46 per pack since 2009, but Phillips noted if the tax decrease is successful in bringing more customers back inside the state’s borders, those very same individuals are more likely to make other purchases at stores where cigarettes are sold.
“What it translates into is more money for Rhode Island,” said Representative John G. Edwards (D-Dist. 70, Tiverton, Portsmouth), a co-sponsor of the bill. “I live in a border community as well, and I honestly believe the cigarette tax in its present form is dangerous to our local businesses. The economy isn’t booming right now, so our small businesses are struggling as it is. We need to stay competitive. Vendors in my community often say that people will come into their stores to buy a pack of cigarettes and leave with newspapers, candy or other items, too.”
Last month, Massachusetts Gov. Deval Patrick proposed hiking the state’s cigarette tax from $2.51 to $3.01 per pack. In Connecticut, the average sales tax for cigarettes is $3.40 per pack.
Last year, supporters of the higher tax have credited it with a decline in smoking rates, especially among youth. But at the time, Minority Leader Brian Newberry told GoLocalProv that the high tax is hurting small businesses in his district. He said it’s all too easy for smokers to just go across the border to Massachusetts.
“We’re a very small state. We can’t afford to have people be non-competitive with neighboring states,” he said. “It’s bad economic policy for the state.”

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