FOR IMMEDIATE RELEASE: February 25, 2013
Center Calls on Politicians to Act on Promises: 25,000 Jobs at Stake
Providence, RI — On the heels of bi-partisan legislation to repeal the state’s sales and meals taxes, submitted recently in the Rhode Island General Assembly, the Rhode Center for Freedom and Prosperity released today an updated version of its landmark 2012 Zero.Zero report, which served as the original basis for the legislation.
The 2013 Zero.Zero report, which provides updated economic and revenue projections from the RI-STAMP economic modeling tool, estimates that up to 25,000 jobs can be created in the Ocean State as a result of the massive economic boom that would be created through elimination of the sales tax.
“Eliminating the sales tax would provide immediate benefit to all Rhode Islanders, especially lower income families; and for businesses, this means more shoppers, higher revenues and profits, and lower compliance costs,” explained Mike Stenhouse, CEO of the Center.
With an immediate incentive for area shoppers to purchase goods and services in the Ocean State, Rhode Island businesses would quickly realize a significant advantage over their southern New England competitors. Further, up to $900 million dollars would be left in Rhode Islanders’ pockets to reinvest in the state’s economy.
Based on monthly cash flow analysis, the 2013 Zero.Zero report estimates that 2014 budget savings of only $105 million would be required if creating tens of thousands of jobs becomes the top priority for the state. This goal can be achieved by eliminating the sales tax as of October 1 of this year; by applying last year’s budget surplus; by freezing the 2014 budget at 2013 levels; and by realizing the projected increases in other revenue categories.
“How can we afford not to do this?” asked Stenhouse. “If state leaders are serious about creating renewed opportunities and a brighter economic future that will help keep our families together and at home here in Rhode Island, we call on them to act upon their recent promises to make economic development the number one priority for our state.”
The report, which provides detailed revenue projections and budget saving ideas in a number of categories, discusses three major areas where the state could replace sales tax revenues over the long term: 1) Over 65% would be made up via higher income tax and other receipts, as a result of more people shopping, working and receiving higher wages in the state; 2) Natural savings in public assistance outlays as more residents earn paychecks instead of welfare checks ; 3) Budget savings in other areas such as corporate welfare, social services waste and fraud, and excessive state worker compensation.
As an added and significant benefit, cities and towns are expected to see local revenue increases of approximately $150 million, mostly from a larger number of businesses paying local commercial property taxes as a result of the economic boom, which could lead to local property tax reductions for families or a reduction in aid from the state.
The full 2013 report, with additional details and analysis and information about RI-STAMP, can be found at www.rifreedom.org. The Zero.Zero sales tax recommendation is part of the Center’s larger “Win-Win” Legislative Solutions agenda for Rhode Island in 2013.
The Rhode Island Center for Freedom and Prosperity, a non-partisan public policy think tank, is the state’s leading free-enterprise advocacy organization. With a credo that freedom is indispensable to citizens’ well-being and prosperity, the Center’s mission is to stimulate a rigorous exchange of ideas with the goal of restoring competitiveness to Rhode Island through the advancement of market-based reform solutions.