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Sen. Felag Proposes 5-Cent Cut To Gas Tax

Sen. Walter S. Felag is proposing that Rhode Island cut its statewide gas tax from 32 cents to 27 cents per gallon in order to keep local businesses competitive with Massachusetts.

In his quest to revitalize the East Bay, Sen. Walter S. Felag Jr. (D-Dist. 10, Warren, Bristol and Tiverton) has proposed a 5-cent per gallon cut in the state gas tax in hopes that local businesses stop losing customers to Massachusetts.

A 5-cent per gallon cut in Rhode Island’s gas tax will impact the state’s tax revenues, but with the gas tax in Massachusetts a full 10 cents a gallon lower than in Rhode Island, Felag is more concerned about local stations losing business to stations just across the border.

“If our gas tax continues to be so high, and so much higher than taxes in Massachusetts, our state should be concerned about how much revenue will be lost if Rhode Island stations close because they cannot compete fairly,” said Senator Felag. “You can’t get blood out of a stone and you can’t get tax revenue out of gas stations that are closed because motorists are driving a few miles into the Bay State to save money.”

Senator Felag has introduced legislation, 2013-S 0085, that would reduce the Rhode Island gasoline tax by 5 cents, from the current 32 cents per gallon to 27 cents per gallon.

Coupled with the federal gas tax, purchasers of gasoline in Rhode Island are paying 51.4 cents per gallon in tax, compared to 41.9 cents in Massachusetts.

“In our efforts to make it better to do business in Rhode Island, we cannot concentrate only on major companies, or start-ups, or certain private sectors. We must do what we can to help the small businesses in our state, and that includes operators of gas stations which, if located near the Massachusetts border, are daily losing business to our neighboring state,” said Senator Felag.

“Admittedly, with some of the tax moves Massachusetts has made in recent years and others the state is talking about, we need to do a major examination of our tax structure to make all businesses in Rhode Island more competitive,” he said. “We can start, though, with this one small area.”

Senator Felag said he is aware that a cut in the gas tax will mean less revenue intake for the state, but he said that “if our businesses are competing on a level playing field, I believe they will do more business and that means more revenue. On the other hand, if these stations go out of business, that will mean a lot of tax revenue that is lost.”

The bill has been referred to the Senate Committee on Finance.

Where do you usually go to buy your gas? Do you think the benefit to business would justify a cut in the gas tax in Rhode Island? Tell us in the comments below.

George Wardwell February 27, 2013 at 11:32 AM
While Senator Felag's proposal is noble and worthy of consideration, it makes no sense to cut a tax on the left hand and place more taxes on the right. The net gain for the tax payer is less net income to feed their family. Has anyone been keeping track of the increased percentage of commodity items in the super market? A year ago, Shaws had Sea Scallops priced at approximately $8.00 per pound. Look at them now, $19.00 and up per pound. Look at your water rate increase, 28% last year and now another 35% is proposed on top of the increase last year. The cost of living has gotten to be so high, with little or no pay raises to offset them, we are all going in the wrong direction. How can we as citizens continue to support increased spending at the Federal, State and Local level when all we hear is cut backs. Imagine, a 20% cut back in the work week for those living pay day to pay day. The Government has to live on the same premise that the average taxpayer does, if you don't need it, don't buy it. I hear the Governor needs additional revenue, well guess what, so do I.

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