Journal photo/ Mary Murphy
Governor Chafee discusses his tax proposal during a breakfast hosted by the Northern Rhode Island Chamber of Commerce at the Kirkbrae Country Club.

By Philip Marcelo
Journal Staff Writer

LINCOLN, R.I. - Governor Chafee said Wednesday morning that he is willing to reconsider his proposal to impose a sales tax on manufacturing equipment and home heating oil.

"We can have discussions," he said. "The manufacturing [tax] is a big one. That is a large revenue piece [in the budget proposal], unfortunately. I wish it was not high as it was."

Chafee made the remarks following an appearance at a breakfast hosted by the Northern Rhode Island Chamber of Commerce at the Kirkbrae Country Club.

During a question-and-answer session, a local manufacturer urged the governor to reconsider his proposal to tax manufacturing equipment at a one-percent sales tax rate.

Chafee acknowledged that proposal was one of the chief concerns he's heard since he unveiled a budget for next year that calls for major changes to the state's sales tax.

"We have been good listeners through the course of this and that is one of the most resonating issues, the tax on manufactured goods," he said in response to the questioner. "I want a state where we are making things. [...] We do not want to drive [manufacturers] out."

Chafee also acknowledged that his proposal to tax home heating oil at one percent is another "hot button issue."

The governor has said previously that he is willing to make changes to his sales tax proposal, though he has not elaborated in great detail. The state legislature is weighing the proposal and has said it will not pass in its current form.

Chafee has said he is open to lowering the proposed state general sales tax to 5.75 percent and restoring tax exempt status to some goods and services that he currently proposes to tax, depending upon what the state's May revenue numbers show.

The governor's current proposal calls for a lowering of the state's seven percent sales tax rate to six percent and expanding it to a host of new items and services. It also calls for creating a new one-percent sales tax for a number of currently exempt items.

The half-hour appearance at the chamber breakfast on Wednesday is one of a number of appearances that Chafee is expected to make before state business leaders in the coming weeks as he seeks to defend his budget and sales tax plan.

Chafee has already addressed the Newport County Chamber of Commerce and the board of the Greater Providence Chamber of Commerce.

According to the state Economic Development Corporation, which is coordinating the chamber visits, the governor is set to discuss his budget at the following venues:

-- April 29, noon, South Kingstown Chamber
-May 4, 8 a.m., North Kingstown Chamber
-May 6, 5 p.m., East Greenwich Chamber
-May 12, 8:30 a.m., Charlestown and Westerly chambers
-May 18, 8 a.m., Narragansett Chamber