JUSTINE OLIVA is the manager of research for the Rhode Island Public Expenditure Council, which recently received an award for outstanding policy achievement from the Governmental Research Association for the council’s tangible tax exemption proposal, which resulted in all tangible personal property assessed under $50,000 being made exempt from taxation statewide in Rhode Island’s fiscal year 2024 budget appropriations act. At this exemption level, RIPEC estimates 75% of all current tangible taxpayers will no longer have any tangible tax liability.
What does receiving this award mean to RIPEC? RIPEC is honored to have received the Outstanding Policy Achievement award from the Governmental Research Association. The GRA is a national group of public policy, governmental and civic research organizations, so recognition from our peers across the country is meaningful. We are particularly pleased to be recognized for our work with elected leaders in developing and refining a proposal for a statewide tangible property tax exemption.
How will this new policy support local businesses and future economic development in the state? What is its long-term economic impact? A tangible property tax is bad for business. Tangible property tax rates generally are very high relative to taxes on real estate and are applied to items for which businesses often have already paid sales tax. The tangible tax also carries a heavy administrative burden. While the exemption on the first $50,000 of value will benefit every business, 75% of businesses are projected to be fully exempt from taxation. All businesses will also benefit from the freezing of tangible tax rates going forward. The exemption encourages businesses to invest in the equipment they need to grow and be more productive and sends a positive signal to out-of-state businesses looking to invest in Rhode Island.
At what point were state elected leaders convinced this policy should be passed by the R.I. General Assembly? The tangible tax exemption ultimately received wide support in the General Assembly, with Senate leadership taking an early role in working to address the issue. RIPEC was fortunate that Senate President Dominick J. Ruggerio, D-Providence, and Sen. Melissa Murray, D-Woonsocket, who sponsored the bill, had already prioritized this issue when we began working with the General Assembly to develop policy solutions. We also were fortunate that the exemption received wide support from House Speaker K. Joseph Shekarchi, D-Warwick, and his House colleagues, as well as the support of Gov. Daniel J. McKee.
Is RIPEC working on any new initiatives for this coming year? If so, what are they? RIPEC will continue to promote tax policies that encourage economic growth. We also remain focused on several other key issues, including K-12 education, municipal finances and the state budget. We recently have added housing to our strategic priorities and will be analyzing the state’s investment in housing.
