Over at Tax.com, David Brunori calls Rhode Island Governor Lincoln Chafee’s latest state sales tax proposal “awful.” You see, Governor Chafee wants to levy a tax on goods and services sold by Ocean State businesses. Examples of previous tax-exempt services include “data processing, landscaping, taxi fares, garbage collection, auto repairs and tickets to theaters and sporting events,” while it would also tax goods such as “agricultural products, boats, clothing, manufacturing machinery.”
Brunori writes that this idea is horrendous because it not only, “violates every notion of sound sales tax policy,” but because the Rhode Island rubes won’t even realize that the tax is ultimately being passed on to them:
In general, businesses should not pay sales tax on their purchases. When they do, the tax is passed on to consumers in the form of higher prices. The tax is often included in the final purchase price and taxed again. The funny thing is that citizens do not know they are being secretly taxed. Everyone knows this.
So wait…do the citizens know they are being taxed or does “everyone” simply mean tax policy wonks? Putting our confusion aside for a second, Governor Chafee has defied the haters like Brunori and Rhode Island businesses, standing by his proposal. But if you’ve got a better idea, he’s more than happy to hear your out:
Chafee said it’s up to his critics to suggest a better option. “Crisis calls for leadership,” Chafee, an independent, said at an impromptu press conference called after the rally. “If you don’t like my proposal, what’s the alternative? No politician likes to raise taxes. … We’re waiting for a better idea.”
Terrible Tax Idea of the Week [Tax.com]
Chafee firm as business groups protest tax plan [Tto10]