Could Amazon.com Inc. customers help pay for tuition-free college in Rhode Island?
Gov. Gina M. Raimondo’s office isn’t saying that’s the anticipated funding source for her spending plan to pay tuition costs for in-state students attending the Community College of Rhode Island, the University of Rhode Island and Rhode Island College. The program, once fully enacted, is expected to cost $30 million each fiscal year.
But Raimondo expects an influx of about $34.7 million next fiscal year in revenue from the state’s 7 percent sales tax assessed on internet sales. Before this year, the state collected about $3 million annually via the internet sales tax, according to the R.I. Department of Revenue.
So, how did the projected revenue suddenly grow to $34.7 million from $3 million?
Thank Amazon, or more specifically, its Rhode Island customers.
Rhode Islanders beginning Feb. 1 will start paying more for purchases made on Amazon.com, as the online retail giant confirmed recently it has agreed to start collecting and remitting the state’s 7 percent sales tax.
The decision reverses a previous stance the online retailer made in 2009, when it cut ties with its business affiliates in Rhode Island to protest the passage of a new law requiring remote companies to collect the online sales tax.
Amazon.com Inc. is the only major online retailer to announce plans to start forwarding the tax collections this year.
“The state is really focused on Amazon.com [Inc.] right now, because Amazon is the king of the online retail industry,” said Paul D. DeRoche, executive director of the R.I. Retail Federation.
Raimondo spokesman Michael Raia says the decision to pursue a tuition-free college plan is not due to newfound money expected from Amazon or any other funding source.
“The decision … [was] made possible by the work that has been done over the last several years to get our fiscal house in order,” he said.
But as Raia points out, new money doesn’t hurt when it comes to covering spending priorities, be they a free-college spending plan or Raimondo’s proposal to cut the car tax by at least 30 percent.
“Any additional revenue only makes the case stronger for why we’re able to make those types of investments,” he said.
The state expects more remote sellers to follow Amazon’s lead, which would further boost R.I. coffers.
“We believe this is the trend across the U.S.,” said Paul E. Grimaldi, R.I. Department of Revenue spokesman.
But not everyone is enamored with the governor being so quick to spend newfound revenue on initiatives that fail to benefit all Rhode Islanders.
“Letting a budget dictate what’s in the interest of Rhode Islanders is backwards thinking,” said Michael Stenhouse, CEO of the R.I. Center of Freedom and Prosperity, a conservative think tank. “If we raise new money here, give it back and allow Rhode Islanders to keep more money.” •