You could drive a golf ball to the Massachusetts line from the front door of Pro’s Liquors on Mendon Road in Woonsocket.
No wonder the owner is so worried about the competition on the other side of the border, where there’s no sales tax on alcoholic beverages.
“Once the people that work down here see it and they’re going home from work, why would they stop here when they can go a mile down the road and pay 7 percent less?” says Ernest Cerce. “If you had a chance as a consumer to choose between paying $10 or $10.70 for the same thing, especially if you were buying that product every week, what would you choose?”
The owners of border-straddling liquor stores like Pro’s are open to ideas for leveling the playing field with their Bay State counterparts, and they see one in a new legislative proposal sponsored by state Rep. John Carnevale (D-Dist. 13, Providence, Johnston).
Carnevale wants the state to waive sales taxes on in-store sales of alcoholic beverages five times a year. Each of those periods would last from a few days to several weeks keyed to a major holiday, such as Thanksgiving or the Fourth of July, when liquor sales rev up.
“I want to make sure that Rhode Island can compete with our neighbors during the big holiday seasons, because it would give our small businesses some much-needed support,” said Carnevale.
The House Finance Committee held the bill for further study after a hearing several days ago, but Larry Berman, a spokesman for House Speaker Gordon Fox, said there is a fair chance lawmakers will take up the issue again later in the session.
The bill proposes a schedule of “tax holidays” for alcohol sales accordingly:
•Memorial Day – May 21 to May 28 this year, and the Tuesday before through the Tuesday after in future years.
•Fourth of July – June 22 to July 2 this year, and June 23 through July 3 in future years.
•Labor Day – Aug. 20 to Sept. 3 this year, and the Tuesday before through the Tuesday after in future years.
•Thanksgiving – Nov. 19 to Nov. 29 this year, and nine days before Thanksgiving through the Friday in future years.
•Winter holidays – Dec. 10 to Dec. 31 this year, and Dec. 11 through Dec. 31 in future years.
Liquor must be sold in a location where it will not be consumed in order to qualify for the tax holiday, thus making bars, pubs and restaurants ineligible. Corporate purchases or any sale exceeding $2,500 would also be excluded from the waiver.
“I think it would be great,” says Cerce. “We can’t compete when we have a 7 percent sales tax on everything and the Massachusetts line is – what – a hundred yards from here?”
Cerce says the unevenness of the playing field is by no means confined to stores in Woonsocket, but much of the Blackstone Valley, and many stores in the East Bay section of the state.
State Rep. Jan Malik (D-Dist. 67, Barrington, Warren) doesn’t need reminding. The owner of Malik’s Liquors in Warren says his business has been off 20 percent since Massachusetts repealed its 6.25 percent sales tax a couple of years ago.
It’s easy enough to save 7 percent on liquor just by driving past his store for another three miles and shopping in nearby Swansea, Mass.
He says he supports Carnevale’s proposal, but he can think of a couple of other legislative initiatives he likes better because they’re even more aggressive. One would abolish sales taxes on liquor altogether. Another would abolish them on spirits and wine while conserving taxes on beer. The state could make up the difference by jiggering the formula for excise taxes associated with importation of alcohol from out-of-state wholesalers to retail distributors. Malik says the latter generates $10-$12 million a year in state revenue.
Malik says the liquor tax “is an important issue” that not just about benefiting liquor vendors. More liquor sales means more jobs in trucking and liquor distribution, too. The benefits would trickle down to other sectors of the economy, he argues.
“There’s a bigger picture here,’ says Malik. “The people at the State House just don’t get it.”
Lawyer Kelly Sheridan, a lobbyist for McLaughlin & Moran, one of the state’s largest liquor distributors, supports the Carnevale bill.
“Obviously the long-term objective would be to abolish the sales tax on liquor altogether,” says Sheridan, but he says the Carnevale bill would take a smaller bite out of state revenues that’s affordable now.
Sheridan says the bill would also give the liquor industry an opportunity to demonstrate, as Malik suggests, that repealing taxes on liquor sales even for a short period of time would stimulate direct sales and ancillary businesses, blunting the loss of revenue somewhat.
“From our perspective the sales tax differential between Massachusetts and Rhode Island remains a serious challenge for the alcoholic beverage industry and the state,” he says. “The proof of that is that a certain Massachusetts retailer is actually taking out a full billboard on the highway marketing Massachusetts as a no-sales-tax state on alcohol. It’s on Interstate-195 as you’re leaving Rhode Island heading towards Seekonk. If it didn’t have financial consequences it would be humorous.”
Brothers Wayne and Kevin Beauchamp are barely in the liquor business yet, but they already like the sound of Carnevale’s House Bill 5310. The liquor license for the former U-Save Liquors on Clinton Street was just transferred into their name and they were busy Friday moving store fixtures and supplies into a new location a block away, in the former Look ‘n’ See Optical Shop.
“We’re looking for any advantage we can get to compete with the neighboring states,” said Wayne Beauchamp. “Any help we can get, we need it.”
Some political pundits, however, dismiss Carnevale’s proposal as a serious economic development initiative. “I’m all for healthy economic competition, but Representative Carnevale’s proposal for five (!) seasonal sales tax holidays on alcohol and liquor is right up there with calamari as the state appetizer,” wrote Dan Lawlor, a columnist for the news web site GoLocalProv.com.
But Carnevale says the bill is would expand “consumer freedom” and help Rhode Island business owners.
“We cannot have a strong economy without confident consumers and thriving businesses,” Carnevale said.