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Taxed Too Much Already

To say that property owners in the City of Providence have had several rough years is putting it mildly.  Combined with a severe recession, higher property taxes have many bailing out of their properties and businesses at an alarming rate. This trend is unsustainable.

As if things were not bad enough, there is now a proposal in the State Legislature to impose a 13% tax on residential rental properties.  Article 24 of the Governor’s FY 2013 Budget Bill would:

  • Impose a 13% tax on tenants (6% hotel tax and 7% sales tax).
  • Require home owners to collect taxes from tenants on short-term rentals of homes and condominiums.
  • Apply to any home or condominium this is rented for a total of 15 days or more per calendar year.
  • Tax the first 30 days of each rental to a different tenant.
  • Apply to month to month rentals, short-term military rentals, seasonal rentals, student rentals, and other rentals throughout the state.
  • Exempt only rentals with a written lease for one year or more.

Neither Connecticut nor Massachusetts charge sales taxes on individual homes or condominiums.  If passed, this legislation would hurt Rhode Island property owners already crippled by the economy by putting Rhode Island at a competitive disadvantage to neighboring states.

Forecasted revenue to the state of RI from this proposal is $3 to $5 million.   This is insignificant revenue to the state budget.   However, it will prevent many property owners from being able to keep their properties.  More foreclosures are not something our housing market needs at this time.

Geo Properties supports The Rhode Island Association of Realtors’ campaign to prevent this proposal from being passed.  We ask that you contact your legislators and ask them:

  • Why would we want to drive away business by raising the price to stay in Rhode Island? We’ve already raised the cost of visiting our beaches and the public outcry was tremendous.
  • Why would we want to add to the number of distressed properties on the market? We need to provide incentives for business and property ownership in RI, not take them away.
  • If Massachusetts couldn’t figure out how to do this, how can RI?

As a Providence resident, small business and real estate owner for over 25 years, I have been through recessions and tough times.  I remained committed to my profession and my State.   In the past, getting through tough times meant working harder and doing a better job.   There were never as many obstacles thrown before us by our State and City to overcome as we now have.

I am optimistic better days lie ahead but only with a concerted effort by a majority of our residents, business leaders and elected officials.  This will be a tremendous undertaking that is absolutely necessary.

A recent article in the Providence Journal by Kate Bramson highlighted the “5 priorities for putting RI back to work.”  Included were: Utilizing our favorable location, keeping college graduates in our state after graduation, improving our business climate with lower taxes and less regulations, improving labor pool skills, and marketing the good quality of life here.

I am in agreement that these are our priorities and need to be turned into reality.   The highest priority should be to improve our business climate.  Rhode Island’s business climate is ranked 48th by Forbes Magazine and 50th by CNBC.  A better business climate is crucial and needs to happen real soon.

If existing business owners are leaving Rhode Island due to the poor business climate, how do we expect to bring in new ones?  Is it time to sign up to the TEA Party?

 

George Potsidis

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