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Council adds voice against state tax bill

November 28, 2012
By RAYMOND L. SMITH , Tribune Chronicle | TribToday.com

WARREN - City Council is expected to vote on a resolution that will oppose the passage of House Bill 601, which is designed to unify tax collection regulations throughout Ohio.

City officials estimate that if passed, the bill would cost Warren an estimated $1.4 million a year in administrative costs and other changes.

Add to that the elimination of the Ohio Estate Tax and the reductions of the Local Government Fund, and the city will lose $2.8 million a year, Councilwoman Helen Rucker, D-at large, said.

"We can't take that kind of hit," she said.

Warren City officials, as well as officials from some other Ohio Municipal League communities, are passing resolutions against the bill, according to Kent Scarrett, a spokesman for the Ohio Municipal League.

The bill is scheduled to have its first legislative hearing before Ohio's Ways and Means Committee today in Columbus.

The city's resolution states the law would force state oversight of municipal income tax administration, administrative policies and procedures for municipal income tax collection, and it will dramatically hamper the city's ability to administer taxes in an effective manner.

Scarrett said the Ohio Municipal League worked with the Municipal Income Tax Uniformity Coalition and supporters of the bill in trying to put in policies that would create greater uniformity in Ohio income tax collection laws while not creating financial burdens on municipalities.

But this version of the bill is an overreach, he said.

"The idea that there is no uniformity in Ohio tax laws is false," Scarrett said. "There already is significant uniformity in Ohio income tax laws. Laws have already been passed in tested in the courts that provide uniformity."

Rep. Cheryl Grossman, R-Grove City, who is sponsoring the bill in the Ohio House, says it is needed because Ohio has one of the most difficult income tax systems in the nation.

"I'm a former mayor so I'm very aware of the necessity of municipal income taxes in the running of communities," Grossman said. "However, there are 600 different cities with more than 300 different income tax forms. It is difficult for businesses that work in four, five or more communities to do their taxes, because of the differing laws they have to follow. Some communities are required to hire specialists to do the taxes."

Only nine other states have cities that assess and collect municipal income tax, according to the Ohio Society of CPAs.

House Bill 601 would allow each municipal corporation to continue to determine its own tax rate, decide the credit it will permit to residents for taxes paid to other municipal corporations, and administer, collect and enforce its own tax. The proposal does not impose any type of centralized collection for municipal income taxes.

"I do not believe it will have the financial impact that some communities are expecting," Grossman said. "From the information I've been receiving, there is a lot of misinterpretation of the bill out there."

The Ohio Chamber of Commerce supports the measure. Daniel Navin, the chamber's vice president of tax policy and economic development, wrote in a release the proposal would make Ohio more attractive for new investment and jobs.

"We urge the legislature to pass Rep. Grossman's bill before the end of the year," he wrote.

Rob Nichols, a spokesman with Gov. Kasich's office, said the governor is interested in proposals that will make the state business-friendly.

"All this does is standardize income tax laws," Nichols said.

Warren Mayor Doug Franklin said he opposes the bill because it is not revenue neutral.

"There is no replacement revenue to make up for the money we will lose through the implementation of this bill," Franklin said. "The good thing is there are cities across the state that are banding together to fight the passage of this bill."

"We believe there should be some uniformity in the tax codes," Franklin said. "Those efforts to make Ohio business-friendly are needed and should be supportive, but they should be a way to accomplish the goal without having negative financial impact on municipal finances."

If council is successful in passing the legislation, Rucker wants to take it to other Trumbull and Mahoning communities so they can pass similar legislation.

rsmith@tribtoday.com

 
 

 

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