Commission would study elimination of RI sales tax

A Massachusetts liquor store advertises its sales tax advantage over Rhode Island.

Talk of eliminating Rhode Island's sales tax is gaining attention, but the proposal has quite a few hurdles to clear.

State Rep. Jan Malik, a Democrat from Warren, is working on a special legislative commission to study that possibility.

"I want the state of Rhode Island at least to be competitive or better. The windfall would be to get it at zero percent," Malik said.

The commission would study how other states manage with no revenue from sales tax, such as New Hampshire.

The House approved the formation of the commission. The Senate still has to decide.

"In Massachusetts as we speak today, it's 6.25 (percent). Connecticut, 6.35. So, can you imagine us at zero?" Malik said.

Here's a quick example: a sales receipt from Malik's liquor store in Rhode Island.

A customer made a $102.95 purchase, but walked out the door having paid $110.16. If that customer made a similar purchase 10 minutes away in Massachusetts, he or she would have saved about $7.

Massachusetts has no sales tax on liquor.

How does Rhode Island compete with 7 percent? Malik said it's simple: it doesn't.

"We're the smallest state. We should be better than everybody else," Malik said.

But would the commission be able to convince state lawmakers to eliminate the sales tax?

"To be honest with you, I think we can do the job. That's why I'm looking for people who are really serious about this," Malik said.

If the Senate approves the formation of the commission, findings would be presented to the General Assembly on or before Feb. 6.