After years of talking about tax reform, Rhode Island was ready to act this year.
The proposals differed dramatically at first: Gov. Donald L. Carcieri, the Rhode Island Public Expenditure Council and leaders of several regional Chambers of Commerce wanted a constitutional amendment to cap state and local spending and tax increases.
The House Democratic leadership and the Greater Providence Chamber of Commerce wanted to reduce the top marginal personal income tax rate and expand tax benefits for lower-income people. The Senate Democratic leadership wanted to take on property-tax reform.
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A non-binding referendum on the governor’s proposal never made it onto the ballot, but both the House and Senate measures were approved, after much debate and some revisions.
The Senate measure will reduce the maximum annual property tax levy increase from 5.5 percent to 4 percent by 2013 and cap school spending hikes directly as well.
“We recognize that this property tax relief package is the beginning, not the end,” Senate Majority Leader M. Teresa Paiva Weed said when the measure was signed into law. “But it is a good beginning and will result in significant, long-term tax relief for property owners.”
The House measure will reduce the personal income tax rate for top earners from the current 9.9 percent to 8 percent in 2007 and 5.5 percent within five years. It also will continue the car tax phaseout, exempting the first $6,000 of assessed value, and expand tax credits for the poor.
— Nicole Dionne
