Rhode Island Gov. Chafee Proposed Tax Increases

Governor Lincoln Chafee proposed over $92 million in tax increases in his January 31 Rhode Island State of the State address. 

Referring to Rhode Island's 10.8 percent unemployment rate, Chafee stated, "Rhode Island is not sharing in the economic recovery that is occurring in our neighboring states and in the rest of the nation." In an effort to bring Rhode Island up to speed with the rest of the nation, the Governor's plan includes the following tax changes:

• Raising the food and beverage tax from 1 to 3 percent.
• Extend the 13 percent lodging tax to the rental of  bed-and-breakfasts and vacation homes.
• Remove the tax-exemption for clothing over $175.
• Increase the cigarette tax from $3.46 per pack to $3.50 per pack.
• Devote nearly $40 million in additional education funding to cities and towns.

The plan focuses the brunt of the tax change on Rhode Island's tourist industry, and according to boston.com, it is estimated to bring in $70 million in additional tax dollars.

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