PROVIDENCE, R.I. -- Imagine this: no more Rhode Island sales tax.
Sound good? But how should the state make up for the $887,201,672 in lost tax revenue? Hikes in other taxes? Budget cuts?
Those were among the questions state lawmakers and others faced Thursday as they gathered on Smith Hill for the first meeting of the Special Joint Legislative Commission to Study the Sales Tax Repeal Act of 2013. And they drew a number of the state's well-known lobbyists back to the State House to watch and listen.
In his newly elected role as chairman, Rep. Jan Malik, D-Warren, acknowledged the skepticism. "I believe in the back of all of your minds, first of all: you are saying: it is impossible. I hope we can get rid of that attitude because this state needs a change.''
Legislation co-sponsored by Malik to repeal the tax by Oct. 1 had a small, but fervent group of backers during the General Assembly session that ended in July. They pitched the idea as a "game-changing'' move that would kick start the Rhode Island economy.
The legislation was co-sponsored in the House by Rep. Brian Newberry, the Republican leader, and Democrats Joseph McNamara, Samuel Azzinaro and Arthur Corvese, and in the Senate by Republicans David Bates and Christopher Ottiano and Democrats Roger Picard, Leonidas Raptakis and William Walaska.
But legislative leaders opted for a study instead of "all aspects'' of Rhode Island's 7 percent sales tax, which has been the subject of much debate -- and tinkering -- in recent years, as lawmakers and the governor scrounged for more revenue.
Rhode Island is currently tied with Indiana, Mississippi, New Jersey and Tennessee for having the second-highest state sales tax rate in the nation. California has the highest state sales tax rate at 7.5 percent.
By way of comparison, the sales tax rate in Massachusetts is 6.25 percent, and Connecticut, 6.35 percent, according to the Department of Revenue.
But Rhode Island also provides a bevy of exemptions from its tax, with 63 goods and services currently exempt and two more categories joining that list before the year is out: "wine and spirits'' and "works of art.''
The last in-depth look at the sales tax was in 2011 when Governor Chafee introduced his $165-million revenue-raising plan. In his first budget, he proposed lowering the overall rate from 7 percent to 6 percent, while extending the tax to a slew of exempt items and services, such as landscaping, dry cleaning, hairdressing and car washes.
He also proposed a new 1-percent sales tax on exempt goods, such as clothing, footwear and home heating oil.
Lawmakers cherry-picked new items to tax, without lowering the rate.
Malik, who owns a liquor store in Warren, just over the line from Seekonk, Mass., assured the panel the goal was not "to try to hurt anybody,'' or pit one industry against another, but rather to set Rhode Island in "the right direction.''
He envisioned an ad welcoming visitors to Rhode Island: "A tax-free shopping place.''
The panel will meet again on Sept. 30 to talk about where Rhode island stands in comparison to other states.