Some small-business owners are insisting they can’t afford new laws requiring them to charge sales tax for the first time.
In creating the $8.1 billion state budget for fiscal 2013, legislation was passed forcing some merchants who had been exempt from charging sales tax in the past to begin the practice. The exemptions included pet care services, clothing over $250, taxi cabs, limousines and other assorted services. The tax changes are projected to generate $10.4 million a year, according to the state.
An Aug. 23 public hearing on the changes generated more than 300 written comments, most from opponents.
Before the hearing, Michael F. Canole, the R.I. Division of Taxation’s chief of examinations, said the department had “determined that the proposed regulation, in and of itself, will not result in a significant economic impact on small businesses or any city or town.”
Maria Toro, owner of Guardian Angel Pet Sitting in Warwick, was among affected business owners at the hearing who disagree.
“These changes right now, I am not able to afford them,” she said. “My customers can’t afford them. I am a one-person show. I’m not set with changing my accounting. I feel the [total tax revenue] generated by this group would not be significant to plug the deficit yet it would severely impact us,” she said. “I feel like this group [of businesses] is being unfairly targeted because we’re not organized and don’t have lobbyists.”
Toro has been in the business for 15 years, after leaving a manufacturing job. She is proud to be self-employed.
“I’ve sacrificed, I’ve always played by the book and I’ve always paid my taxes,” she told tax-division officials at the hearing. The last two years, however, have been a nightmare, she said. Business is slow because people can no longer afford to go on vacation and board their pets; other customers have been laid off. Add in high gasoline prices and car taxes and it’s been a struggle. She also said some competitors are working without declaring their earnings and undercutting her pricing.
Estate and Corporate Income Taxes are changing next year, and business owners and executives should know the details. The PBN Summit on November 6th will provide those details and more - including how much Obamacare's Employer Mandate could cost.
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