Chafee: 6% tax would help RI's image

PROVIDENCE, R.I. (WPRI) - Governor Lincoln Chafee says he believes his plan to dramatically change Rhode Island's sales tax structure will improve the state's image.

The Governor's 2012 budget plan includes lowering the state sales tax from seven-percent to six-percent, while also adding a one-percent sales tax on certain items and services that are currently tax-exempt.

"I have been always a little disappointed when the ranking agencies look at Rhode Island and call us "tax hell" because we have a high seven-percent sales tax. But they don't look at the fine print, all our exempt items. They just look at that seven-percent," Chafee said on Wednesday.

The Governor says those negative rankings affected his decision to change the state's tax structure, in hopes of making Rhode Island more attractive to outsiders.

"The ranking agencies are going to look at Rhode Island and instead of saying "tax hell" they'll say "tax haven." It's the Caiman Islands here."

Governor Chafee argues that some new taxes are needed because Rhode Island has long ignored long-term structural weaknesses.

"The status quo in Rhode Island is unacceptable so we're changing that."