LIVING PROOF: State Rep. Jan Malik is owner of Malik’s Fine Wine & Spirits in Warren. He’s lost sales to Mass. stores that benefit from a sales tax exemption. A temporary exemption will go into effect in R.I. for wine and spirits on Dec. 1.
State Rep. Jan Malik, D-Warren, owner of Malik’s Fine Wine & Spirits, says the time has come for his fellow Ocean State businesspeople to speak out against Rhode Island’s sales tax.
Sponsor of a recent bill to eliminate the tax and chairman of a General Assembly study commission on the idea, Malik has scheduled an Oct. 29 hearing specifically to hear what business owners think about it.
“I am hoping the business sector will come out and tell their stories on the sales tax,” Malik said. “They need to speak out. In this state sometimes we take a defeatist attitude that nothing can be done. But we have to be serious about taking Rhode Island beyond where we are at now.”
Since early last month, Malik’s study committee has been hearing testimony and reports on the state sales tax, but it’s unclear exactly how much, if any, traction the effort has gained.
Gov. Lincoln D. Chafee, who has twice previously recommended eliminating sales tax exemptions to broaden the base and raise revenue, left the sales tax as it was in his fiscal 2014 budget proposal.
Chafee spokeswoman Christine Hunsinger said the governor “always looks at every tool” when putting together the budget, but wouldn’t comment on the likelihood of a sales tax proposal in the next budget.
“His interest is in closing a $150 million hole and putting together a balanced budget,” Hunsinger said.
House Speaker Gordon D. Fox said in an email statement he is “impressed with the work of Malik’s commission” and is “open to looking carefully at their ideas, but keeping in mind that the sales tax accounts for nearly $900 million in revenue.”
Malik’s belief that the Rhode Island economy would benefit from ending the 7 percent sales tax was born out of the impact of tax-policy changes on his liquor store, which is not far from the state line in Warren.
When Massachusetts decided to end the sales tax exemption for alcohol sold at liquor stores in 2009, Malik said sales at his store jumped 6 percent.
Then in 2010, Massachusetts voters passed a ballot initiative that brought the exemption back the following year, meaning competitors across the border in Swansea collected no tax while he had to collect 7 percent.