Rhode Island Halts Sales Tax on Original Art

Rhode Island this week became the first state government in the nation to halt sales tax collections on original and limited edition artwork.

Rhode Island’s tax changes that took effect Dec. 1 allow shoppers who purchase original or limited editions of art anywhere in the Ocean State to be except from paying the state’s 7% sales tax.

The policy is the result of legislation approved by the Rhode Island General Assembly and signed into law by Gov. Lincoln D. Chafee. The law also now exempts the sales tax for wine from liquor stores until March 31, 2015.

“These new provisions come just in time for the busy shopping season,” said Rhode Island Tax Administrator David M. Sullivan in a statement. “They should help to spur sales and boost Rhode Island’s economy.”

The Rhode Island Division of Taxation said artwork that qualifies for the sales tax exemptions include “a book or other writing, a play, a musical composition, a painting, a print, a photograph, a sculpture, the creation of a film, the creation of a dance, and traditional crafts and fine crafts.” Fine arts photography will also qualify but commercial photos such as wedding pictures will not. Artists who wish to qualify for the sales tax exemption are required to pay a $10 permit fee.

Paul L. Dion, chief of revenue analysis for the Rhode Island Department of Revenue, told the Providence Journal that the state projects it will lose about $825,000 in revenue this year as a result of the art tax break and about $1.9 million in the upcoming budget year that commences on July 1, 2014. Dion also said that Rhode Island is expected to lose around $7.2 million in revenue from its elimination of sales tax on wine but also gain roughly $6 million from a recent new law that raises an excise tax on alcohol generally paid by distributors.

Rhode Island Rep. Jan Malik, D-Warren, introduced legislation aiming to repeal the state’s sales tax and led a commission this past September studying the issue. Rhode Island is tied with Indiana, Mississippi, New Jersey and Tennessee for having the second highest sales tax in the nation behind only New York.