It’s the dog days of August. While most Rhode Islanders are thinking about summer vacation or a day at the beach, another group is focused on a more weighty topic — taxes.

The Tax Policy Workgroup, including 21 accountants, lawyers, economists and other tax specialists appointed by Governor Carcieri, has been meeting since mid-June to study and recommend a long-term strategic tax plan.

The group, including business and labor leaders and several state tax officers, is studying the impact of the tax structure on Rhode Island’s ability to compete with other states in recruiting companies and creating jobs. The tax experts will meet through the summer and fall and report their findings and recommendations in December.

The 21 should be commended, and encouraged.

Their work is true public service that will help all Rhode Islanders better understand how the state’s tax policy compares with those of other states. Their conclusions will provide a platform for discussions next year about putting together a new state budget and realigning economic-development policy.

The timing is important.

Rhode Island is in a recession. Other states in New England, and across the United States, are also suffering through a severe slowdown that may get worse before it gets better. Eventually, however, the tough times will end.

The states that offer solid, well-structured budgets and competitive tax policies will emerge from the recession ready to expand. When credit loosens, companies will begin considering where to relocate or add jobs.

Rhode Island has a national reputation as a high-tax state. But some progress has been made.

The General Assembly’s decision this year to hold the line on broad-based taxes moves the state in the right direction. It sends a signal to businesses that Rhode Island is serious about reducing its tax burden.

Still, Rhode Island lags behind other states.

A report prepared by the state Department of Revenue in June found that the state ranked 11th nationwide in total state and local tax burden for fiscal year 2006, with taxpayers paying $119.79 per $1,000 of state personal income. That’s slightly better than in 2005, when Rhode Island ranked ninth, but still puts it well behind other states.

By comparison, Massachusetts had the 37th highest total tax burden, while Connecticut ranked 20th.

When Carcieri named and launched the Tax Policy Workgroup in May, he said, “Rhode Island cannot prosper if its tax policies hinder the creation of jobs and are a disincentive to investment. Unfortunately, I believe we are now at a competitive disadvantage with many of the other states in New England, including Massachusetts and Connecticut.”

Since then, the tax workgroup has decided to also benchmark the state’s tax policies against other states inside and outside New England. The states they picked compete for jobs or offer models of types of taxes that may be more equitable, efficient, predictable or transparent than Rhode Island’s.

Other states being looked at are Virginia, New Jersey, North Carolina, New Hampshire and Delaware, according to Paul Dion, chief of the office of revenue analysis in the state Department of Revenue.

Each state has a unique interest to the tax group. For example, Delaware has a size and an urban profile that is similar to Rhode Island’s. Virginia has a highly rated school system and the group wants to learn how the state’s taxpayers pay for it. New Hampshire assesses a business enterprise tax, rather than a business income tax. New Jersey has high population-density areas, such as parts of Rhode Island.

The group looked at Florida, which always comes up as the place where Rhode Islanders retire because of a lower tax burden. But that state also has a tourism-driven economy and has different characteristics that may not be comparable to Rhode Island.

The group has been broken down into subgroups to look at three areas. The first is taxation on business, including the cost and benefits of tax credits, combined reporting and alternative methods.

The second area is state taxes paid by individuals, including personal income taxes, the estate tax and consumption taxes. The discussion will include income-tax credits, the relationship between tax credits and the flat-rate personal-income tax and the feasibility of shifting from income-based to consumption taxes.

The third area of inquiry will deal with property-tax capacity, including the impact of personal and statutory exemptions, as well as how tax classifications affect economic competitiveness in Rhode Island’s cities and towns.

The group’s mission is broad, and there’s a lot to be done within five months.

“We are miles away from any judgments or conclusions,” said Gary Sasse, chairman of the group and director of the state Department of Revenue.

He predicts the group will develop four to six “decision packages,” that will lay out options and tradeoffs that try to balance taxes on income, wealth and consumption.

The findings and recommendations should be useful to legislative leaders when they start putting together next year’s budget. Already, this year’s budget is spinning out of balance as the state slips deeper into recession, cutting state revenues, and all the projected cost savings are not being realized.

During this year’s session of the General Assembly, the legislators, facing an election and strong business lobbying, turned away from raising broad-based taxes to balance the budget.

Next year, however, with the election behind them and another sizable deficit looming, they may be tempted to roll back previous tax cuts or raise other taxes to balance the budget.

That would be a mistake.

The Tax Policy Workgroup will give them some new ideas and options. And there will be new data on how competitive Rhode Island’s tax policy is with other states that are recruiting the same companies and jobs. The group’s work will help determine what people and companies wind up paying in taxes next year and in the future.

The 21 people meeting this summer and fall have their hands full.

But it’s worthwhile, important work that will benefit all Rhode Islanders.Tax Policy Workgroup

 The next meeting of the Tax Policy Workgroup is Thursday, Aug. 14, from 8 to 9:30 a.m. in Conference Room A of the Department of Administration-Powers Building. The public is invited. The agenda includes reports from the three subgroups and a presentation on the sales tax.

 The 21-member group includes:

 Mary F. Bernard, president of the Rhode Island Society of CPAs and principal in Kahn, Litwin, Renza & Co.; Edward Cooney, vice president and treasurer, Nortek Inc. and chairman of the Greater Providence Chamber of Commerce; Ellen Frank, senior policy analyst, The Poverty Institute at Rhode Island College School of Social Work;

 John J. Gelati, president of Rhode Island Association of Assessing Officers and an assessor in the City of Providence; John Gregory, president and chief executive officer, Northern Rhode Island Chamber of Commerce; Karen S.D. Grande, partner, Edwards Angel Palmer & Dodge; Mark Higgins, dean, University of Rhode Island College of Business;

 Saul Kaplan, director of the state Economic Development Corporation; Leonard Lardaro, professor, URI; E. Hans Lundsten, shareholder, Adler Pollock & Sheehan; George Nee, secretary-treasurer of the AFL-CIO; H. Peter Olsen, partner, Hinkley, Allen Snyder; Edward P. Pieroni, JD, CFP, Andsager, Bartlett & Pieroni, LLP;

 Michael Sabitoni, president of the Rhode Island Builders Trade Council; Gary Sasse, director of the state Department of Revenue; John Simmons, executive director of the Rhode Island Public Expenditure Council; Robert Tannenwald, director, New England Public Policy Center/Federal Reserve Bank of Boston;

 Patricia A. Thompson, tax partner at Piccerelli, Gilstein & Co. LLP; Al Verrecchia, chairman of Hasbro Inc.; Robert Walsh, Jr., executive director of NEA-R.I.; Grafton H. Wiley IV, shareholder in charge of Rhode Island offices, Tofias.

jkostrze@projo.com