Proponents say eliminating RI sales tax would create jobs

It's a radical proposal -- wiping out the sales tax in Rhode Island.

Proponents say if you're looking for a game changer to move the needle and create jobs, nothing would have as much impact as doing away with the state sales tax.

The House Finance Committee heard arguments for and against Wednesday.

"This reform likely represents the largest tax relief package and economic stimulus plan ever considered by this committee," said Mike Stenhouse of the Center for Progress and Prosperity.

He's talking about a proposal to eliminate entirely Rhode Island's sales tax, currently at 7 percent, and less than a point more than sales taxes in Massachusetts and Connecticut.

The thought being the nearly $900 million in sales tax revenue would be covered by more jobs, created by more businesses, spurred by the tax advantage.

At Central Liquors in Central Falls, owner Vincent Bilotti said he experienced the tax advantage possibilities when Massachusetts, about three miles from his store, put a sales tax on liquor for the first time.

"Then when it did happen, I figured it would be months before I'd feel anything. But instantaneously that first month we were up by 25 to 30 percent," Bilotti said.

Up and up to 50 percent. The result, jobs.

Bilotti said he hired two people.

"You can't do 50 percent more business with the same number of people," Bilotti said.

Experts told the Finance Committee that's why there wouldn't be a $900 million drop in revenues. If Bilotti's experience translates to thousands of other businesses -- and one-third of Rhode Island communities are border communities -- they claim a move like this would be a game changer to recharge Rhode Island's economy.

House Speaker Gordon Fox said the zero-percent sales tax has zero percent chance of passage. But sponsor Rep. Jan Malik, D-Barrington, said he at least wants to start the discussion, and Fox said he welcomes that.