Rhode Island – Sales Tax Imposed on New Items

Rhode Island- The state’s 7% sales tax will be imposed for the first time on over-the-counter drugs, certain types of computer software, medical marijuana, and other items all part of the $7.7 billion state budget approved by legislature and signed into law by Governor Chafee.

“ We have made a concerted effort to reach out to all stakeholders to let them know about the new law and what its impact will be. Our goal is to give retailers and others the information and other tools that they need to comply with the new law,” said the state’s assistant tax administrator Peter McVay.

State licenses will not be issue to marijuana dispensaries, announced Chafee. This puts a planned 4 percent surcharge on “net patient revenue” from those facilities on hold.

In response to concerns from the tourism industry, which makes up a significant portion of Newport’s economy, Senate President M. Teresa Paiva Weed and other members of Senate’s Newport delegation will seek to repeal the tax on certain scenic tours and transportation services, though the Chafee administration says the tax will go into effect as scheduled.

The tax on computer software downloaded or delivered electronically caused confusion. The intent is to treat computer software transferred online the same as software bought in a store. This tax specifically aims at “pre-written” software, such as Microsoft Excel or Turbo Tax and cell phone applications, such as “Angry Birds.” This tax is expected to generate $6.7 million.