Rhode Island's Experimental Wine and Spirits Exemption
- Jul 8, 2013 | Gail Cole
Update 4.20.2015: The temporary sales tax exemption for wine and spirits, initially scheduled to terminate on March 31, 2015, will now end on June 30, 2015.
The 2014 Rhode Island budget has been approved. It will not increase taxes or fees, but it does allow a sales tax exemption for creative works sold anywhere in the state. It also institutes a 16-month trial sales tax exemption for sales of wine and spirits.
The exemption begins on December 1 of this year and is scheduled to terminate on March 31, 2015. During that time, the existing "mandatory 6 percent-over-wholesale markup" will be eliminated, so retailers will be able to set their own prices.
Rhode Island v. Massachusetts
The exemption is intended to help Rhode Island be more competitive with neighboring Massachusetts, where sales of wine and spirits have been tax free since 2011.
Beer drinkers are out of luck--the trial exemption does not apply to sales of beer. This is not a reflection on the liquor consumption of Rhode Island lawmakers. Rather, it is because the competitor, Massachusetts, collects a 5-cent deposit on each and every can or bottle of beer sold. Rhode Island does not, giving it a competitive edge.
Excise taxes on the rise
Meanwhile, numerous alcoholic beverages are subject to a temporary increase in excise taxes. Between July 1, 2013, and March 31, 2015, the following changes are in effect:
| Beverage | Old tax rate | New tax rate |
|---|---|---|
| Still wines | $0.60 | $1.40 |
| Whiskey, other distilled spirits | $3.75 | $5.40 |
| Malt beverages, including beer | $3.00 | $3.30 |
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