Proposed taxes on luxury second homes under fire
By Christine Dunn Journal Staff Writer

   PROVIDENCE — Commerce Secretary Stefan Pryor appeared at a packed hearing of the House Finance Committee Tuesday night t o d e f e n d G o v e r n o r Raimondo’s proposals to introduce a state property tax for luxury second homes and a private home rental tax.    Pryor said the new rental taxes are needed to help pay for “an aggressive new branding and marketing initiative” to help boost the state’s tourism industry, while the new state property tax, on non-owner occupied properties valued at $1 million or above, would raise about $12 million to help close a $190-million budget deficit.    “ W e a r e a l r e a d y incredibly high in our property tax” in Rhode Island, noted Rep. Joy Hearn, D-Barrington. Others, including representatives of the state Realtors’ association, said the property tax provision could be expanded in the future to include more property owners.    Bruce Lane, president of the Rhode Island Association of Realtors, added that the so-called “Taylor Swift tax” has generated “the kind of publicity that Rhode Island doesn’t need.” The proposed tax would be $2.50 per $1,000 of assessed value.    Peter Schaefer, associate director of the Rhode Island League of Cities and Towns, said the proposed state property tax “moves us away from the long standing dedication of property tax revenues to support city and town services in Rhode Island ... . We are concerned about the precedent that will be established,” he said.    “We’re setting up a pipeline, and I’m really nervous about that,” said Rep. Antonio Giarrusso, R-East Greenwich.    The 13-percent private home rental tax seeks to capture lodging transactions conducted over the Internet, through sites such as airbnb, flipkey, and     , which currently escape taxation completely. It would also tax the short-term (30 days or less) rentals of beach homes by private individuals.    “I don’t buy any of it,” said Rep. Robert B. Jacquard, D-Cranston, about the argument from the Raimondo administration that the rentals tax is about tax “fairness” for all lodging providers. Hotels must collect a 7 percent sales tax, 6 percent hotel tax, and 1 percent local hotel tax for every room they rent. “This is all about beach houses renting by the week,” he said. “People in Rhode Island are not competing with hotels.”    Rep. Teresa Tanzi, D-Narragansett, was concerned about proposed changes to the way hotel and rental taxes would be distributed, specifically a plan that would redirect some of the money now going to local tourism boards to the state Commerce Corporation. Her concerns were echoed by several other committee members.    But Pryor urged committee members to look at the bigger picture, and said a focused marketing effort, instead of the current “scattershot” approach, to promote Rhode Island as a tourism destination would have benefits for everyone. “We have a lot to market in Rhode Island, “ he said, but “we do have years of underinvestment.”    —cdunn    @     (401) 277-7913    On Twitter: @ProjoChris

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