H 7703Taxes

Taxation - Public Service Corporation Tax

This bill suspends the four percent gross earnings tax on electric utility corporations from 2027 through 2036.

Held for study

Population
Affected

Introduced Feb 11, 2026Committee House Finance

Plain-English Summary

This legislation amends the Rhode Island General Laws concerning the Public Service Corporation Tax. Currently, corporations involved in manufacturing, selling, distributing, or transmitting electricity are subject to a four percent tax on their gross earnings. This bill suspends that specific tax requirement starting on January 1, 2027. The suspension of the tax will remain in effect for nine years, ending on January 1, 2036, at which point the tax would presumably be reinstated unless further legislative action is taken.

For younger readers

There are big companies that make sure our homes and schools have electricity to power lights and computers. Usually, these companies have to pay a part of the money they make to the state government. This payment is called a tax. This new law says that starting in the year 2027, these electric companies will not have to pay this specific tax for nine years. After those nine years are up in 2036, the rule changes back, and they might have to pay it again.

Who & Where It Applies

Impacted groups

Electric utility corporationsState budget administratorsUtility ratepayersUtility company shareholdersGeneral taxpayers

Impacted communities

All

Constitutional & Fiscal Check

None Likely

Estimated cost

None

Estimated revenue

None

Bill Analysis

Both viewpoints

For Progressives

Could potentially lower monthly electricity bills for low-income and working-class families if the corporations pass the tax savings on to consumers.
Might free up capital for utility companies to invest in modernizing the electrical grid, which is necessary for a transition to green energy sources.
Could prevent rate hikes for essential services during the suspension period, providing some financial stability for the community.
Significantly reduces state revenue, which could lead to funding cuts for social safety nets, public education, and other vital community services.
Provides a large tax break to profitable corporations without any mandate that the savings be used to benefit workers or consumers.
Shifts the fiscal burden of the state onto individual taxpayers to make up for the lost corporate tax revenue.

For Conservatives

Reduces the tax burden on businesses, allowing private corporations to retain earnings and potentially reinvest in growth and infrastructure.
Limits the amount of revenue the government collects, which aligns with the goal of reducing the size and spending power of the state.
Removes a government-imposed cost on energy production and distribution, promoting a more business-friendly economic environment.
Creates a specific tax carve-out for one industry (electric utilities) rather than applying a flat tax cut across all sectors, which can be seen as the government picking winners and losers.
The temporary nature of the suspension (ending in 2036) creates future uncertainty for business planning rather than establishing a permanent solution.
Could lead to the implementation of other taxes or fees on citizens to replace the lost revenue, potentially complicating the tax code further.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 4 additions

SECTION 1. Section 44-13-4 of the General Laws in Chapter 44-13 entitled "Public Service Corporation Tax" is hereby amended to read as follows: 44-13-4. Rate of taxation. The tax imposed will be at the following rates:

(1) In the case of every corporation whose principal business is a steamboat or ferryboat business as a common carrier, every common carrier steam or electric railroad corporation, every street railway corporation, every common carrier dining, sleeping, chair, or parlor car corporation, every corporation whose principal business is selling and distributing water to the public, and every toll bridge corporation, one and one-fourth percent (1.25%) of its gross earnings;

(2) In the case of every corporation whose principal business is manufacturing, selling, distributing and/or transmitting currents of electricity to be used for light, heat, or motive power, four percent (4%) of its gross earnings, but deductions shall be made of gross earnings from the transmission or sale of electricity to other public utility corporations, non-regulated power producers, or municipal utilities for resale, whether within or outside of this state; provided, that the tax measured by the portion of the utility’s gross earnings as is derived from the manufacture and sale of illuminating and heating gas and its by-products and the merchandising of gas appliances shall be computed at the rate of three percent (3%); Notwithstanding the above, on and after January 1, 2027, the rate of tax set forth in subsection (2) of this section shall be suspended until January 1, 2036;

(3) In the case of every express corporation carrying on its business on steamboats, steam or electric railroads, or street railways and of every public service corporation whose principal business is that of a telegraph corporation, four percent (4%) of its gross earnings;

(4) In the case of every telecommunications corporation providing telecommunications service, ten percent (10%) of its gross earnings; provided, that the rate shall be nine percent (9%) effective July 1, 1985, eight percent (8%) effective July 1, 1986, seven percent (7%) effective July 1, 1987, six percent (6%) effective July 1, 1988, and five percent (5%) effective July 1, 1997. For purposes of this chapter, “telecommunications service” means the transmission of any interactive two-way electromagnetic communications including voice, image, data, and other information, by means of wire, cable, including fiber optical cable, microwave, and radio wave, or any combinations of these media. This definition does not include value added non-voice services in which computer processing applications are used to act on the form, content, code, and protocol of the information to be transmitted;

(5) In the case of every public service cable corporation, eight percent (8%) of its gross earnings;

(6) In the case of every corporation whose principal business is manufacturing, selling and/or distributing to the public illuminating or heating gas, three percent (3%) of its gross earnings.

SECTION 2. This act shall take effect on January 1, 2027.