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Ohio Governor Seeks to Broaden Sales Tax Base, Reduce Rate


 Ohio Governor Seeks Sales Tax Expansion, Rate Reduction.

Ohio Governor John Kasich (R) has released his 2014-15 budget proposal. In it, he calls for a reduction in the state general sales tax rate but a broadening of the sales tax base. He expects the proposed net tax cut of $1.4 billion to "make Ohio more competitive in attracting investment and jobs, while also spreading the tax burden more fairly across industries."

Reduce Sales Tax Rate

Under the proposed plan, the state sales tax would be reduced by 9%, dropping to 5 percent from 5.5 percent.

Expand Sales Tax to Many Services

A number of professional services currently not taxed would be subject to the state sales tax under the new plan. However, services "connected to the essentials of life," such as medical care and housing, would be exempt. (p. 16).

In all, approximately 30% more services would be subject to sales tax under the proposed plan. These include, but are not limited to:

  • Accounting;
  • Architecture;
  • Legal Advice; and
  • Lobbying.

Local Sales Taxes

Ohio's local sales tax is, according to the proposed budget, "complicated." Therefore, the Administration proposes to extend the expansion of the sales tax base to counties and transit authorities, but "also reduce local sales tax rates by differing amounts based on the expected level of sales tax base expansion by county or transit authority." (p.16). Oy.

Net Impact of Changes to Sales Tax

The plan states that "[t]he net impact of all the proposed sales tax changes in an increase in state sales tax revenue of $1,322 million in FY 2014 and $1,799 million in FY 2915." (p.17).

Reaction

Reaction is mixed, and many Ohio lawmakers are withholding judgment until they have a chance to examine the budget proposal in depth. Said Senator Edna Brown (D-Toledo), "They're not bad choices by any means. … I've heard some good things. I've heard some reservations, but I'm hopeful." Representative Matt Szollosi (D-Oregon) said the proposed income tax cuts were "something that will cause us to take issue."

The Ohio General Assembly, which is controlled by Republicans, has until the end of the current fiscal year to sanction the FY 2014-15 budget.

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Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.