Tensions ran high in a House Finance Committee hearing yesterday afternoon as business owners testified in opposition to portions of next year's state budget proposal, which would increase taxes on restaurant meals and beverages. More than thirty people signed up to speak in opposition to the bill.
The plan proposed by Gov. Lincoln Chafee '75 P'14 would increase the tax on meals sold for immediate consumption and beverages from 8 to 10 percent. Neighboring states Connecticut and Massachusetts currently tax these items at 6.35 and 6.25 percent, respectively. The legislation would also increase taxes on bed-and-breakfast inns and services like taxi cabs, freight services and pet care.
Department of Administration officials spoke in favor of the three proposed tax increases at the hearing. Richard Licht, director of the department, said he does not blame business owners for opposing the bill, but urged House representatives to "make a decision on what is the most discretionary income" that can be taxed.
Rep. Jan Malik, D-Barrington and Warren, who sits on the finance committee, told the administrators he commended their bravery for appearing and defending the proposals, but he said he did not think the proposals would pass.
"I think they're grasping at straws, to be honest with you," Malik told The Herald after the hearing. "They should've known, we're trying to be business-friendly in this state," he said. Chafee proposed a similar tax last year that did not move past the committee.
"I think the tax-proposed increase will have a very negative impact on restaurant business," said Bahjat Shariff, an operating partner for Panera Bread in Rhode Island. He said Panera Bread restaurants in Massachusetts perform much better than the seven locations in Rhode Island.
Citing high unemployment and commodity prices in Rhode Island, Shariff said, "The tax will have a dramatic impact. It will wipe out a lot of small restaurants."
As a business owner himself, Malik said he cannot inflict this burden on Rhode Island residents.
"I'm the only one sitting on that panel who knows what it is, who knows what these people are going to feel if we implement this tax," Malik said.
Several attendees also testified at the Senate Finance Committee hearing Tuesday.
