Legislator: Repeal Liquor Reporting Requirement

In introducing legislation to do away with the requirement, Sen. Leonidas P. Raptakis (D-Dist. 33, Coventry, East Greenwich, West Grenwich), a small business owner, called the new regulation "burdensome to businesses" and expressed concern that “it was buried deep in the state budget and was not a topic of discussion” during budget debate in the previous session.

According to a statehouse press release, the reporting requirement was included as part of the State Budget for the current fiscal year that was signed into law last June. The new accounting and reporting procedures are a result of concerns of some Rhode Island liquor retailers that the state’s imposition of a sales tax on liquor puts Rhode Island businesses at a disadvantage to nearby Massachusetts stores, where there is no sales tax on alcoholic beverages.

“Elected officials throughout the state are talking about reducing the burdens on businesses and streamlining regulations and then we see this kind of proposal put through in the eleventh hour, buried hundreds of pages into the state budget,” said Raptakis. “Many of us in the hospitality industry were focused on stopping the Governor’s sales tax hike proposal which would have hurt our businesses in this tough economy. Now it looks like someone is trying to punish our industry by forcing more paperwork on us with no warning and no time to plan.”

According to Raptakis, most restaurant and bar owners received notification from the Division of Taxation only a few weeks ago week that they had until Feb. 1, to provide the new report, a detailed two-page form that requires businesses to compile their total alcoholic beverage sales for the previous year. Currently, restaurants and bars have to file a monthly form detailing their total sales, both food and beverage. Senator Raptakis said the new requirement, which seeks to break out information on alcoholic beverage sales, seems to be designed solely as a means of gathering data to impose a new tax hike.

By giving businesses little more than a month to compile these numbers, Raptakis said the new law is not taking into account the fact that there may be many businesses which don’t have a system to break down what they do on alcohol sales as opposed to food sales. He said it is one thing to get advanced notice that your business must start compiling this information going forward, but demanding that businesses turn back the clock and dig up such details is not realistic.

“When this kind of proposal gets thrown out there, you get bad public policy outcomes,” he said. “This is an unnecessary new burden on businesses and I think the General Assembly will recognize that this is not the kind of regulation we want to impose on Rhode Island businesses which are already struggling in this economy.”