Carcieri Announces Formation Of Tax Policy Strategy Workgroup

05-21-2008

Panel Will Develop Long-Term Tax Policy Reform Recommendations

Governor Donald L. Carcieri today announced the establishment of a Tax Policy Workgroup to create a long-term strategic tax plan for the state. Specifically, the Governor has charged the workgroup, which will be chaired by Department of Revenue Director Gary Sasse, with developing proposals for tax policy reform that meet the tests of equity, efficiency, predictability, competitiveness and transparency.

The workgroup includes twenty one members and includes a broad spectrum of experts. Among them are accountants and attorneys who specialize in tax matters, economists, and business and labor leaders.

“Rhode Island is long overdue for a comprehensive review and reform of the state’s tax policy,” Governor Carcieri said. “The way we structure our tax system affects our citizens, our businesses, our economy and the revenue we have to finance state activities. Given the state’s current and future fiscal situation, the time to act is now and the formation of this workgroup is the proper first step.”

“I have asked Gary Sasse to chair a Tax Policy Workgroup to recommend a long-term tax strategy designed to make Rhode Island’s tax structure a competitive advantage in retaining jobs and recruiting businesses,” the Governor continued. “Rhode Island cannot prosper if its tax policies hinder the creation of jobs and are a disincentive to investment. Unfortunately, I believe we are now at a competitive disadvantage with many of the other states in New England, including Massachusetts and Connecticut. That needs to change.”

“With Gary Sasse now at the helm of the Department of Revenue, Rhode Island has the leadership and experience necessary to identify and revise elements of our tax policy that are detrimental to the growth of our economy,” Governor Carcieri said.

“A multi-year strategic tax plan is needed to improve Rhode Island’s competitive position and efficiently fund public revenue,” commented Gary Sasse. “In order for the workgroup to meet the Governor’s goals, it is necessary to have members with diverse areas of expertise and strong technical knowledge regarding tax policy issues. This workgroup provides the state with those necessary skills. I look forward to working with them, both individually and collectively, in this most important endeavor.”

In particular, the workgroup will consider three areas of state tax policy and develop recommendations on tax issues that affect economic development. First, the panel will review taxation on business, including the cost and benefits of tax credits, combined reporting and alternative ways to tax businesses. Second, state taxes paid by individuals will be considered, including personal income taxes, the estate tax and consumption taxes including income tax credits; the relationship between tax credits and the flat rate personal income tax; and the feasibility of shifting from income based to consumption taxes. The third area of inquiry will deal with property tax capacity, including the impact on personal and statutory exemptions as well as how tax classifications affect economic competitiveness in Rhode Island cities and towns.

The recommendations of the panel are due in December 2008 and are expected to include a comparison with the tax structures of Massachusetts and Connecticut.