The Block Island Times

Editorial: Killing the golden goose

Mar 03, 2012

Last week, realtor Edie Blane said that a proposed new 13-percent tax on rental houses amounted to killing the golden goose.

She’s right. Here’s why:

A 2010 study commissioned by the Rhode Island Division of Tourism found that if tourism didn’t exist, each household would pay $1,310 more in taxes to maintain the current level of state and local tax receipts.

Each visitor already creates about $119 in tax receipts, $69 of which goes to state and local authorities.

It takes only 198 visitors to pay for one Rhode Island public school student for one year, while every 187 visitors create a new job here.

Each visitor generates about $444 in expenditures, $88 of which goes to RI businesses that do not directly “touch” that visitor.

Tourism activity generated $541 million in state and local government revenue in 2010. Here on Block Island it generated $221 million in the local economy. While tourism is responsible for 5 percent of the state’s economy, it contributed 8.4 percent of state tax revenue in 2010.

For Rhode Island in general and Block Island in particular, tourism is indeed the “golden goose.”

And yet, the governor has recently closed the welcome center on Route 95 that last year served 450,000 visitors. He has proposed increasing the meal tax in restaurants from 8 percent to 10 percent. And there’s this big new tax on short-term house rentals and small B&Bs.

Our neighboring states have beautiful beaches and enticing restaurants also, not to mention great B&Bs and homes to rent. Comments on this newspaper’s website from readers who rent here indicate that, if a 13-percent increase in rental rates is passed on to visitors — and what Block Island homeowner can afford to absorb such a loss, with power and sewer rates what they are? — they’ll look elsewhere. Day trippers will continue to replace the visitors who stay here longer and contribute more to the economy and the life of the community.

This is already an expensive place, for residents and visitors alike. A 13-percent increase is too much to absorb in this shaky economy, and it’s time for our elected officials to say so. Hearings are next week at the State House. They should be there.

Comments (1)
Posted by: Robert Pierce Forbes | Mar 03, 2012 13:49

The BI Times is right on. Rhode Island has great beaches and wonderful summer communities--nicer, perhaps, than its neighbors in Massachusetts and Connecticut.  But 13% nicer? Probably not. So long to thousands of renters.  We're planning on purchasing a rental property on the Block, but if there is a serious chance of this misconceived bill passing, we may have to rethink our plans.

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