Banks in Rhode Island are currently taxed on a three-factor calculation that includes in-state sales, property and payroll. Lawmakers balked when Gov. Dan McKee made a late-session budget amendment requested by Citizens to adopt a single-factor tax formula for large financial institutions.
At the same time, House Speaker Joe Shekarchi indicated last week that he took the bank’s concern seriously, and a bill to create the single-factor tax is scheduled for votes by House and Senate Finance committees on Tuesday.
In a statement, McKee said the bill, sponsored in the House by Rep. Joseph Solomon (D-Warwick) and in the Senate by Sen. Louis DiPalma (D-Middletown), will make Rhode Island’s banking tax structure more competitive.
“Through this legislation, our goal is to create a more level playing field with Massachusetts in a way that is both transparent and in the best interest of the people of Rhode Island,” McKee said. “We have been working collaboratively and diligently with the Speaker and Senate President on this issue and we look forward to a thorough vetting by the General Assembly later this week.”
The bill is poised to clear both chambers before the General Assembly goes on recess, probably after Thursday’s session.
The tax change will cost $15 million in revenue over a full year, and state Sen. Sam Bell (D-Providence) on social media called that too large a cost.
Citizens opened an expansive new Rhode Island office in Johnston in 2018, and some lawmakers doubted that the bank would move many jobs out of state if the tax change did not happen.
Citizens Financial Group bills itself as one of the nation’s oldest and biggest financial institutions, with $220 billion in assets as of last September. The bank has about 3,200 ATMs and 1,100 branches in 14 states.
In a statement, Keith Kelly, president of Citizens Rhode Island, said, “Citizens is encouraged by recent progress and greatly appreciates the leadership of Governor McKee, Speaker Shekarchi, Senate President Ruggerio and all others involved. We look forward to continuing to work closely with the state towards an outcome that is a win for both the business community and Rhode Island.”
