House Bill 49 Debate on Centralized Collections
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I write to correct some misinformation conveyed in the column this week by Policy Matters about Governor Kasich’s plan to centralize and streamline the municipal income tax on business income.
That column echoes a campaign of misinformation being waged by municipalities across Ohio working to defeat a proposal the governor made that will advance the best interests of all Ohio, including cities and villages.
The goal is to remedy a big problem for Ohio businesses that are required to file tax returns in every city where they earn income.
Some of us complain about having to file one municipal (or state or federal) income tax return. Imagine having to file fifty, or hundreds of returns with different municipalities, all having their own tax rates, rules and filing requirements.
That is the compliance nightmare that businesses face in Ohio. Many report that it costs them more to file all those returns than the amount of tax they owe.
The governor’s proposal would have businesses file just one form in one place and be subject to one consistent set of rules regardless of how many cities in which they do business. The Department of Taxation would process the tax and send all payments on a quarterly schedule, plus interest, back to the respective city or village, minus a 1% administration fee.
The column claims businesses can file returns with a third-party administrator. That’s true but many cities still require forms to be filed separately with the city. As well, cities pay from two to five times higher costs than having the state collect and process the tax. The state’s low fee, in fact, will save cities across Ohio more than $9 million.
The column claims that municipalities would lose control over their major source of revenue. Not true. Cities would control tax rates and credits, and retain responsibility for collecting more than 85% of their municipal income tax revenue.
The column trots out the specter of the state eliminating the local profits tax, just as the state repealed the corporate income tax in 2005. Two problems with that "concern:" Only the author and some municipal officials has mentioned eliminating the local tax, and by the way, the commercial activity tax replaced the corporate income tax because it had become riddled with loopholes and fewer and fewer companies were paying the tax.
The governor has made a “pro-business” proposal that would enhance the business climate in Ohio and is being supported by nearly every major business group in the state. It would also cut costs for almost all municipalities and leave them with more revenue to support services in their communities.
There is no valid reason for municipalities to cling to their obsolete and counterproductive tax system. Ohio must continue improving its economic environment to compete for new businesses and jobs.
Ohio Tax Commissioner
Glad you wrote this rebuttal to the Policy Matters letter. However, you refer to "a campaign of misinformation being waged by municipalities." May I remind you that you and your governor serve the people who make up these municipalities. There is such a thing as home rule in this state and most of the people in these municipalities are a little fed up with the state continuously encroaching upon the things we - the people - should be responsible for. One of those things is how WE determine how to collect OUR local taxes that we use to do things like street and road repair, snow removal and park maintenance just to name a few. We don't want to share 1% of those collections to fund a state agency - Ohio Business Gateway - that is the epitome of an inefficient, improperly-ran organization. Speaking of "a campaign of misinformation," what exactly do you call comments like "Imagine having to file fifty, or hundreds of returns with different municipalities, all having their own tax rates, rules and filing requirements." I would like for you to share with me - and the rest of Ohio for that matter - the names of companies that have to do this. I'm willing to bet that there are very few if any at all. This is simply the very same verbiage used, by you and others in state government, when the state wanted to "reform" municipal earnings taxes. So when you mention "a campaign of misinformation," that's a little like the pot calling the kettle black. We all know what is going on here. It's the big elephant in the room that no one wants to talk about. You and your governor want to begin with collecting business taxes, but you won't stop there. Your next step will be to begin collecting all earnings taxes. Take a 1% chunk of that (does anyone believe that it will stay at 1% after the state has total control of collections?) and you're talking about an immense amount of money feeding the previously mentioned government agency that is so bad businesses don't even like to use it. Your governor's proposal will not leave our municipality with more revenue to support services. What it will do is necessitate an ever larger carry-over of existing revenue from year to year in order to make ends meet while the aforementioned government agency inefficiently collects OUR revenue for a quarter and then sends it to us only after they have corrected the many errors that they are notorious for making. And it is obvious why a business group would be in favor of this. It would be easier to cheat an inefficient government agency than it would a local office who's employees work together with other offices to insure that companies pay what is due to the City. How many times do you think Ohio Business Gateway will contact our water office to see if they have any information on companies or new residents? How many times will they contact our service supervisor for his input? That's what happens here on a daily basis. Those offices are right next to each other and they talk to each other every day! There is no way that a problem-ridden Ohio Business Gateway can collect revenue more efficiently than our LOCAL people do. It is my hope that our local representatives in Columbus will not act like sycophant lapdogs to the governor on this issue. Get rid of this proposal before it does harm to OUR municipalities while engorging yet another state agency with OUR hard-earned tax dollars. This comment has been hidden due to low approval.
Gary L. Lewis
March 15, 2017 | Share: