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Commission co-chairs say bills lowering Rhode Island's sales tax will help spur economy

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PROVIDENCE, Rhode Island — Two Rhode Island lawmakers launched a push Tuesday to lower the state's 7 percent sales tax, saying it would help spur the economy.

Rep. Jan Malik and Sen. Walter Felag Jr., Democrats from Warren, are each introducing two bills — one that would lower the sales tax to 3 percent and a second that calls instead for a reduction to 6 percent on most items.

The second bill would also nix the tax on utilities for all businesses and make permanent the temporary elimination of the tax on liquor and wine sales. The bill would keep the meals and beverages tax at 8 percent, the motor vehicle tax at 7 percent and the hotel tax and telecommunications tax at 12 percent.

Rhode Island's sales tax generates around $900 million a year for the state. Lowering it to 3 percent would cost an estimated $467 million. Lowering it to 6 percent would cost more than $90 million.

But Malik said the measures would spur economic activity, recapture money being spent across Rhode Island's borders and create thousands of jobs, making up for the loss.

Supporters of lowering the sales tax say business owners in Rhode Island are at a disadvantage because neighboring Massachusetts and Connecticut have lower sales taxes of 6.25 percent and 6.35 percent, respectively.

"There's no way in hell this state should put any business at a disadvantage," said Malik, who last year pushed to scrap the sales tax altogether, an effort he now says is unrealistic.

Malik and Felag served as co-chairmen of a special commission created by General Assembly last year to study the possible elimination of the sales tax.

The panel didn't make specific recommendations or issue a report. Commission members couldn't agree on a level for the sales tax, but everyone agreed it should be lower, according to Malik.

He said he hopes the sales tax bills are part of an overall package that reduces taxes this legislative session.

"We have to find a way to lower taxes to make us more competitive with other states," Malik said.

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