Rhode Island Considers Dumping Sales Tax

Rhode Island has a special legislative commission to study possible repeal of the sales tax!  That should sound shocking since states with a sales tax typically generate at least 25% of their General Fund revenues from the sales tax. What might lead a state to consider dumping a longstanding revenue generator?  Well, we do hear a lot about problems with the sales tax including:

• It's eroding base of tangible personal property in a digital/services world of today.
• It's tax gap generated from catalog and e-commerce sales where,many vendors have physical presence (and thus tax collection obligations) in only one or just a few states.

I don't think these problems are reasons to repeal the tax though, but instead to reform it.

I have more in my tax policy blog at SalesTaxSupport.com - here.

What do you think?