Rep. Malik: Send tax money back to towns

Proposed legislation calls for sales tax, and meals and beverage tax to go back to towns

Posted 4/19/16

Rep. Jan P. Malik has introduced legislation that would increase the amount of funds distributed to cities and towns that result from the meals and beverage tax. 

Currently, there is a 1 …

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Rep. Malik: Send tax money back to towns

Proposed legislation calls for sales tax, and meals and beverage tax to go back to towns

Posted

Rep. Jan P. Malik has introduced legislation that would increase the amount of funds distributed to cities and towns that result from the meals and beverage tax. 

Currently, there is a 1 percent meals and beverage tax, on top of the 7 percent sales tax, that all eating and drinking establishments are required to collect. The Department of Taxation then keeps the 7 percent sales tax for the state and sends the 1 percent meals and beverage tax back to the originating city or town. Rep. Malik’s bill would incrementally start to give back cities and towns a portion of the sales tax collected by the cities and towns.

“I introduced this legislation because our cities and towns are in desperate need of additional funding and our communities need a different revenue stream than just increasing property taxes or car taxes,” said Rep. Malik (D-Dist. 67, Warren, Barrington). 

“This bill isn’t a tax increase either. Rather, it is simply allocating more of the money that is already collected in each municipality to each municipality. Simply put, more of the money that is already being spent in eating establishments in each city and town will now stay in that city and town where it can be put to good use.”

If passed, the legislation’s effects would begin in fiscal year 2017 and the money distributed to cities and towns from the meals and beverage tax would increase at the rate of 1 percent per fiscal year until the reimbursement rate reaches the full 8 percent tax collected by 2024. The increase in funds to municipalities would be contingent on the budget for the corresponding fiscal year having a surplus of funds.

For comparison, in 2015, Providence received $4,927,997 from the 1 percent meals and beverage tax. Bristol received $393,164 and Warren received $270,327 from the 1 percent collected. 

Rep. Malik hopes that his legislation could off-set the impact of rising property taxes and municipal car taxes.

“I’d like to thank the leadership for their pro-small business initiatives, such as reducing the corporate tax, and I think this legislation would fall into the same category of municipal development," he said. 

"By allowing our cities and towns to keep more of the taxes collected on meals and beverages, this would be a huge win for our municipalities’ taxpayers by sending more money into their cities and towns without raising a single tax or fee."

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