LINCOLN – Senate President Dominick J. Ruggerio on Thursday unveiled a proposal to exempt $100,000 of business-owned or leased property from the tangible tax levied on assets and collected by municipalities.
Known as the tangible personal property tax, this levy is paid by businesses on property other than real estate that has definitive value, such as equipment, furniture and fixtures.
This legislation, which would apply to all Rhode Island businesses, would result in 85% of current tangible property taxpayers no longer having any liability. Eligible property above $100,000 would still be taxable.
Speaking during the Northern Rhode Island Chamber of Commerce’s “Eggs & Issues” breakfast on Thursday held at Kirkbrae Country Club, Ruggerio said elected officials should be offering more substantial tax relief beyond the “modest tax cuts” that have already been proposed.
“The tangible tax is more than just a financial burden,” he said. “It is also an administrative headache, particularly for smaller businesses. It is complex to comply with, and some small businesses have to hire an accountant to navigate the requirements.”
Sen. Melissa A. Murray, D-Woonsocket, is expected to introduce the legislation during Thursday’s Senate session.
In a statement Thursday, Murray called the bill “a way our state can provide help for the small businesses that support our cities and towns, make our communities unique, and most importantly, employ Rhode Islanders.”
The legislation provides that the state would reimburse municipalities for the lost revenue, similar to the phased-out motor vehicle tax. Senate leaders worked with the R.I. Public Expenditure Council to craft the legislation. According to RIPEC, the tax cut would cost roughly $36.6 million a year in reimbursements to Rhode Island cities and towns.
Ruggerio noted how collection and monitoring compliance can also be a burden on city and town halls across Rhode Island, particularly smaller communities with limited staff.
“So, addressing the issue will benefit them,” said Ruggerio. “But our goal here is to provide relief to small businesses.”
The bill, which if approved would take effect in fiscal 2025, would require municipalities and fire districts to cap tangible property tax rates at the fiscal 2023 level, however this cap would not apply to those that “utilize a uniform tax rate for all classes of property.”
“This is a step we can and should take to help companies continue to invest and grow here in Rhode Island,” said Ruggerio.
Christopher Allen is a PBN staff writer. You may contact him at Allen@PBN.com.
