Chamber President 'Thrilled' At Rejection Of Chafee Tax Plan

After dozens of business leaders gathered at the State House this week — and following a day-long hearing where they testified before the House Finance Committee — much of the focus was on the big-picture economic impact of Gov. Lincoln Chafee's tax proposals.

During an interview at the chamber office on April 14, President Deb Ramos offered some other insights on how the governor's plans — later rejected by House Speaker Gordon Fox — would impact business owners.

"I was thrilled to hear (Fox's rejection) and somewhat surprised, but there were some of those representatives who were getting it (and) who were hearing the message from the people," Ramos said.

Aside from the obvious loss of revenue that would occur under Chafee's proposal, Ramos said, business owners could also lose time in having to realign their financial processes. One example, Ramos said, is pre-printed invoices. Companies that currently list the 7 percent sales tax would have to pay for new forms reflecting another tax structure.

"Internally, they'd have to make changes to their computer software and day-to-day procedures," explained Ramos. "There are expenses that are incurred, and there's extra time added to train staff."

Chafee's proposal would lower the state sales tax to 6 percent and impose a 1-percent levy on a range of goods and services, while adding a 6-percent tax to live entertainment and newspaper subscriptions.

Ramos said the additional tax burden on businesses that some of those services — including hairdressers and landscapers — would hurt them.

"For a hairdresser, someone who goes every three weeks may go every four or five weeks, and for a landscaper who mows a lawn every two weeks, people may not have their lawn cut by the business any more," she explained. "There's definitely going to be business loss and job loss."

On April 12, dozens of business leaders attended a press conference in the State House rotunda to decry the governor's proposals. Ramos attended the gathering, and said she was glad to see how many people were there.

"I thought there was a good turnout, given that it was 11 in the morning — it speaks a lot about how the people of Rhode Island think of this tax proposal," Ramos said.

After the business leaders spoke, Chafee held his own press conference and suggested that they should offer options to his plan. Ramos said that while she was at the business leaders' appearance earlier in the day, a reporter (who she declined to name) was repeatedly asking them to come up with alternatives.

"Why is he asking us to do the governor's and legislature's jobs?" Ramos asked rhetorically. "We all have our jobs, and we need to do our jobs — if we don't do our jobs, we get suspended or we get let go."

As for potential options, Ramos said she'd like to see the state lower its pension costs and go after savings in municipal budgets through consolidation among cities and towns.

"I testified and said they need to revisit the pension system, they need to look at these recent salary increases, and with all of the budget cust to the cities and towns, maybe the cuts would not be so deep if they were pursuing the idea of regionalization," Ramos explained.

She also offered this analogy: "We have a tree in our yard, and the droppings of the tree are making a mess. Just cut down the tree; if there are more negatives than positives — just cut down the tree. They need to get to the root of the problem, and the root of the problem is spending."

Like the other business owners and Chamber leaders who spoke this week, Ramos said Chafee's tax plans would have led to lost jobs — or at the very least, employers opting for part-time workers instead of full-time help.

"It would definitely be detrimental to additional hiring of staff in the private sector," she stated, recalling her own experience with this issue. "Over the past year or so, I've spoken to three people about a position here at the Chamber who were unemployed — some of them for more than a year — and offering them part-time work (and) they weren't interested, so they stayed on unemployment."

Her members have also told her of similar decisions they've made, Ramos added.

"They just want to dip their toe in the water, so to speak, to hire staff, instead of putting their whole foot in the water," she said.

And even with the apparent defeat of Chafee's proposals, Ramos explained: "The battle for the business community, for the Chambers of Commerce, hasn't subsided. We still have to be involved and be a voice, because we don't know what's ahead of us."