Will new E. Prov. tax yield expected value? Not likely

In early March I had the pleasure of receiving from East Providence a new tax for operating a business in the town. It is known as a business-registration fee, which was to be renewable every … More

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Op-Ed

Will new E. Prov. tax yield expected value? Not likely

Posted 3/26/12

In early March I had the pleasure of receiving from East Providence a new tax for operating a business in the town. It is known as a business-registration fee, which was to be renewable every year.

This did not come as a surprise, considering all the news about the city’s financial health. It is no secret that the community is in trouble along with many other towns and cities, not to mention the state.

At a public meeting on Feb. 28, East Providence did not seek the business community’s experience. If it had, we would not have liked the tax increase, but we would have shown the city leaders that they are squandering the value of the city for a lack of the true cost and revenue derived from the new tax.

More recently, after complaints from the business community the city did rescind the tax. But all is not as it should be.

Apparently, the state now wants to tax the distribution sector in Rhode Island, another example of how not to encourage businesses to locate and/or expand here. Some companies, including CVS Caremark Corp., have built distribution centers here. Adding to their tax burden is a sure way to get them to consider leaving while curtailing expansion plans.

Although not a large amount, at $25, the tax that was proposed in East Providence was evidence of the lack of knowledge in our cities and towns about sound financial moves.

You see, they do not calculate the true cost of this tax and the benefit the public sector will receive.

In business, as in a private life, we take into consideration what a specific cost does for our bottom line or family budget. The true costs to the city of collecting this tax could have included preparing invoices, resolving disputes, processing the resulting payments, matching employment-producing business against potential tax streams, reconciling bank statements, correcting mis-keyed data and pursuing delinquent taxpayers.

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