Tax Increases in Store Next Door?

Rhode Island’s Governor Lincoln Chafee has proposed $93 million in tax rate increases and base expansions for FY 13. According to the governor’s budget overview, the proposals would:

• Triple the tax on meals and beverages from 1% to 3%.
• Extend the 13% lodging tax to vacation home rentals and small B&Bs (those with fewer than 3 bedrooms for rent).
• Extend the state’s 7% sales tax to limousine and taxi rides, moving and storage, pet services, and car washes, among other services.
• Eliminate a sales tax exemption for clothing and footwear costing more than $175 (currently all clothing and footwear is exempt regardless of cost).
• Increase the cigarette tax from $3.46 to $3.50 per pack.
• Double the maximum tax on premium cigars from 50 cents to $1.00.

The governor plans to earmark the $39.5 million in revenue from the higher meals and beverage tax for the state’s recently adopted school funding formula.