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Senate panel cuts proposed tangible tax exemption from $100K to $50K

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Senate panel cuts proposed tangible tax exemption from $100K to $50K

May 26, 2023 | 2:44 pm ET
By Nancy Lavin
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Senate panel cuts proposed tangible tax exemption from $100K to $50K
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A tangible tax exemption bill has been amended during deliberations by the Rhode Island Senate. (Photo by Janine L. Weisman/Rhode Island Current)

A proposed tax break on up to $100,000 of business’ tangible property has been cut in half: to $50,000.

The amended version of the tangible tax exemption bill, sponsored by Sen. Melissa Murray, a Woonsocket Democrat, was passed by the Senate Finance Committee on Thursday, according to online notes with the bill.

The push to give small businesses a break on paying taxes on – and filing the paperwork for – office furniture, computers, kitchen appliances and other tangible assets was unveiled by Senate President Dominick Ruggerio, a Warwick Democrat, in March. The measure, backed by local businesses and the Rhode Island Public Expenditure Council (RIPEC), would have wiped out the tangible tax bill for 85% of businesses, while substantially reducing the payment made by the remaining 15% of companies. 

The tax break in its original form would have cost $36.6 million in tax revenue otherwise collected through Rhode Island’s cities and towns (since tangible taxes are municipal), which the state would reimburse municipalities for starting in fiscal year 2025, according to the legislation. The amended bill still includes the reimbursement provision, though the total cost is lower: $25 million, according to calculations by RIPEC. The percentage of businesses that would no longer pay any tangible taxes at all is also less: 75% rather than 85%, according to RIPEC.

Why the exemption was cut in half is unclear. Greg Pare, a spokesman for the Senate, said in an email Friday that an announcement would be made once all parties were “on the same page,” likely on May 30.

Michael DiBiase, executive director for RIPEC, said the organization was happy even with the amended version of the bill.

“We think $50,000 is great,” DiBiase said in an interview Friday. “It really advances tangible property tax relief. It’s a substantial amount of money and we’re extremely pleased.”

DiBiase noted that RIPEC’s original recommendation called for a $250,000 exemption phased in over five years, with a $5,000 exemption in the first year.

Two bills under review in the Rhode Island House, sponsored by Rep. Carol McEntee, a South Kingstown Democrat, and Rep. Brian Rea, a Smithfield Republican, follow RIPEC’s initial recommendation to gradually eliminate taxes on up to $250,000 of assessed property over five years.