April 13, 2011

ITEP’s Testimony on Sales Tax Modernization Proposal


My testimony focuses on Governor Chafee’s Sales Tax Modernization Proposal, which would generally broaden Rhode Island’s sales tax base, lower the general state sales tax rate, and raise additional revenue to help mitigate budget cuts. In particular, my testimony will provide thoughts on two components of the governor’s proposal: adding a mix of services to the general sales tax base and applying a 1% sales tax to most goods currently exempted from the general sales tax base. In addition, I will share with you the results of an ITEP analysis of the distributional impact of the governor’s plan. Finally, I will end with a recommendation to improve the impact the governor’s plan would have on low-and moderate-income households: expanding Rhode Island’s state Earned Income Tax Credit.

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