State law regulating municipal income taxes in Ohio ought to be uniform and fair. That should go without saying.
But a bill in the General Assembly to alter the rules by which towns and cities levy and collect income taxes may reduce their revenue from that source. At a time when most Ohio municipalities are struggling with lower revenue, in part because of cuts in state assistance, that is a big concern for local government officials.
That's why Warren City Council last year passed a resolution opposing the statewide uniform municipal income tax collections. Other cities and villages that collect income taxes should join the chorus.
Exactly how much revenue towns and cities would lose through enactment of the measure is unclear. Warren Tax Administrator Tom Gaffney estimated that it would cost the city as much as $1.2 million per year. ''We can't take that kind of hit,'' Councilwoman Helen Rucker said.
Last year the bill died in committee after several hearings. Re-introduced last month by Ohio House Majority Whip Cheryl Grossman, R-Grove City, what is now called Ohio House Bill 5 is designed to provide statewide uniformity for municipal income tax procedures.
On the surface that makes sense. As Washington National Tax Services pointed out last year, this would simplify accounting for companies that have multiple locations or transient workers in more than one of Ohio's 550-some taxing entities. Since the rules are different from place to place, confusion, errors and accounting costs increase without uniformity.
One change that makes a lot of sense, for example, is what constitutes a workday for transient employees. The Ohio rule is that the worker must spend most of his workday in the municipality for it to count as a taxable day. Currently, there is no minimum time, so municipalities have different thresholds. A construction or landscaping company might, therefore, have to apply different rules to the same employee during the same pay period.
Some of the changes, though, are likely to reduce municipal collections. The biggest drop in revenue would stem from a provision requiring municipalities to allow businesses to carry forward net operating losses for five years. Currently, the municipalities decide whether to allow for net operating losses and if so, for how long.
The Ohio Legislative Service Commission predicts this and other provisions ''are likely to create, overall, a net revenue loss to municipalities. Though potential total revenue losses are undetermined, they may be significant, potentially millions of dollars annually.''
The bill would also increase expenses for some municipalities. It requires tax administrators in municipalities of more than 30,000 people to appoint problem resolution officers to assist taxpayers.
The proposal allows 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.
It's unfortunate that Ohio has 300 different municipal tax forms. Only nine other states have cities that assess and collect municipal income tax, according to the Ohio Society of CPAs. Uniformity would certainly make the state more attractive to businesses.
But uniformity must be achieved without wrecking fiscal budgets. One way might be by having the state take over collections. The proposal does not impose any type of centralized collection for municipal income taxes. But if it did, municipalities like Warren might be able to reduce their cost enough to offset the projected income loss.