Bill Sponsors
Paolino, E Morgan, Rogers, de la Cruz, Appollonio, Famiglietti, Raptakis, Patalano, Dimitri, and Sosnowski
Committee
Senate Finance
Summary
Select
This legislation phases out the existing 1% local meals and beverage tax in Rhode Island. Currently, this tax is collected on prepared food and drinks at restaurants and similar establishments and is distributed to the specific city or town where the meal was sold. Beginning on January 1, 2027, the tax rate will decrease by 0.25% annually. The tax is scheduled to be fully eliminated (sunset) by January 1, 2030.
Sponsor
Analysis
Pros for Progressives
- Eliminates a regressive tax on food, which disproportionately affects lower-income individuals who rely on prepared meals due to work schedules or lack of kitchen facilities.
- Lowers the overall cost of living for working-class families by reducing the final price of meals and beverages at local establishments.
- Supports small, locally-owned restaurants and food vendors by making their products more affordable, potentially increasing their business volume and sustainability.
Cons for Progressives
- Removes a significant source of revenue for cities and towns, which could lead to austerity measures and cuts to vital municipal public services like libraries, parks, and sanitation.
- May force municipalities to increase property taxes to make up for the lost revenue, which could increase housing costs for renters and homeowners.
- Reduces the collective pool of funds available for community welfare without providing a replacement funding mechanism for local governments.
Pros for Conservatives
- Reduces the overall tax burden on citizens and businesses, aligning with the principle of allowing individuals to keep more of their earned income.
- Eliminates a government revenue stream, thereby forcing local governments to shrink their budgets and reduce the size of the public sector.
- Encourages economic activity and corporate freedom by lowering costs for consumers, potentially driving higher sales for business owners.
Cons for Conservatives
- Delays the tax relief until 2027 rather than providing immediate financial relief to taxpayers and businesses.
- Could inadvertently lead to increases in property taxes if local governments refuse to cut spending, merely shifting the tax burden rather than eliminating it.
- Disrespects the autonomy of towns to manage their own revenue streams if they rely on this consumption tax rather than property taxes.
Constitutional Concerns
None Likely
Impact Overview
Groups Affected
- Restaurant owners
- Restaurant patrons
- Municipal governments
- Taxpayers
- Division of Taxation
Towns Affected
All
Cost to Taxpayers
None
Revenue Generated
None
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Regulatory
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Privacy Impact
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Bill Status
Current Status
Held
Comm Passed
Floor Passed
Law
History
• 01/16/2026 Introduced, referred to Senate Finance
Bill Text
SECTION 1. Section 44-18-18.1 of the General Laws in Chapter 44-18 entitled "Sales and Use Taxes — Liability and Computation" is hereby amended to read as follows:
44-18-18.1. Local meals and beverage tax.
(a) There is hereby levied and imposed, upon every purchaser of a meal and/or beverage, in addition to all other taxes and fees now imposed by law, a local meals and beverage tax upon each and every meal and/or beverage sold within the state of Rhode Island in or from an eating and/or drinking establishment, whether prepared in the eating and/or drinking establishment or not and whether consumed at the premises or not, at a rate of one percent of the gross receipts. The tax shall be paid to the tax administrator by the retailer at the time and in the manner provided.
(b) All sums received by the division of taxation under this section as taxes, penalties, or forfeitures, interest, costs of suit, and fines shall be distributed at least quarterly and credited and paid by the state treasurer to the city or town where the meals and beverages are delivered.
(c) When used in this section, the following words have the following meanings:
(1) “Beverage” means all nonalcoholic beverages, as well as alcoholic beverages, beer, lager beer, ale, porter, wine, similar fermented malt, or vinous liquor.
(2) “Eating and/or drinking establishment” means and includes restaurants, bars, taverns, lounges, cafeterias, lunch counters, drive-ins, roadside ice cream and refreshment stands, fish-and- chip places, fried chicken places, pizzerias, food-and-drink concessions, or similar facilities in amusement parks, bowling alleys, clubs, caterers, drive-in theatres, industrial plants, race tracks, shore resorts or other locations, lunch carts, mobile canteens and other similar vehicles, and other like places of business that furnish or provide facilities for immediate consumption of food at tables, chairs, or, counters or from trays, plates, cups, or other tableware, or in parking facilities provided primarily for the use of patrons in consuming products purchased at the location. Ordinarily, eating establishment does not mean and include food stores and supermarkets. Eating establishments does not mean “vending machines,” a self-contained automatic device that dispenses for sale foods, beverages, or confection products. Retailers selling prepared foods in bulk, either in customer- furnished containers or in the seller’s containers, for example “Soup and Sauce” establishments, are deemed to be selling prepared foods ordinarily for immediate consumption and, as such, are considered eating establishments.
(3) “Meal” means any prepared food or beverage offered or held out for sale by an eating and/or drinking establishment for the purpose of being consumed by any person to satisfy the appetite and that is ready for immediate consumption. All such food and beverage, unless otherwise specifically exempted or excluded herein shall be included, whether intended to be consumed on the seller’s premises or elsewhere, whether designated as breakfast, lunch, snack, dinner, supper, or by some other name, and without regard to the manner, time, or place of service.
(d) This local meals and beverage tax shall be administered and collected by the division of taxation, and unless provided to the contrary in this chapter, all of the administration, collection, and other provisions of chapters 18 and 19 of this title apply.
(e) For the tax year beginning on January 1, 2027, and each January 1 thereafter, the local meals and beverage tax shall be reduced by twenty-five one hundredths of one percent (0.25%).
(f) The local meals and beverage tax shall sunset on January 1, 2030.
SECTION 2. This act shall take effect upon passage.
44-18-18.1. Local meals and beverage tax.
(a) There is hereby levied and imposed, upon every purchaser of a meal and/or beverage, in addition to all other taxes and fees now imposed by law, a local meals and beverage tax upon each and every meal and/or beverage sold within the state of Rhode Island in or from an eating and/or drinking establishment, whether prepared in the eating and/or drinking establishment or not and whether consumed at the premises or not, at a rate of one percent of the gross receipts. The tax shall be paid to the tax administrator by the retailer at the time and in the manner provided.
(b) All sums received by the division of taxation under this section as taxes, penalties, or forfeitures, interest, costs of suit, and fines shall be distributed at least quarterly and credited and paid by the state treasurer to the city or town where the meals and beverages are delivered.
(c) When used in this section, the following words have the following meanings:
(1) “Beverage” means all nonalcoholic beverages, as well as alcoholic beverages, beer, lager beer, ale, porter, wine, similar fermented malt, or vinous liquor.
(2) “Eating and/or drinking establishment” means and includes restaurants, bars, taverns, lounges, cafeterias, lunch counters, drive-ins, roadside ice cream and refreshment stands, fish-and- chip places, fried chicken places, pizzerias, food-and-drink concessions, or similar facilities in amusement parks, bowling alleys, clubs, caterers, drive-in theatres, industrial plants, race tracks, shore resorts or other locations, lunch carts, mobile canteens and other similar vehicles, and other like places of business that furnish or provide facilities for immediate consumption of food at tables, chairs, or, counters or from trays, plates, cups, or other tableware, or in parking facilities provided primarily for the use of patrons in consuming products purchased at the location. Ordinarily, eating establishment does not mean and include food stores and supermarkets. Eating establishments does not mean “vending machines,” a self-contained automatic device that dispenses for sale foods, beverages, or confection products. Retailers selling prepared foods in bulk, either in customer- furnished containers or in the seller’s containers, for example “Soup and Sauce” establishments, are deemed to be selling prepared foods ordinarily for immediate consumption and, as such, are considered eating establishments.
(3) “Meal” means any prepared food or beverage offered or held out for sale by an eating and/or drinking establishment for the purpose of being consumed by any person to satisfy the appetite and that is ready for immediate consumption. All such food and beverage, unless otherwise specifically exempted or excluded herein shall be included, whether intended to be consumed on the seller’s premises or elsewhere, whether designated as breakfast, lunch, snack, dinner, supper, or by some other name, and without regard to the manner, time, or place of service.
(d) This local meals and beverage tax shall be administered and collected by the division of taxation, and unless provided to the contrary in this chapter, all of the administration, collection, and other provisions of chapters 18 and 19 of this title apply.
(e) For the tax year beginning on January 1, 2027, and each January 1 thereafter, the local meals and beverage tax shall be reduced by twenty-five one hundredths of one percent (0.25%).
(f) The local meals and beverage tax shall sunset on January 1, 2030.
SECTION 2. This act shall take effect upon passage.