Governor’s proposal could be taxing for consumers
Governor John Kasich’s proposal to broaden the state’s sales tax base while lowering rates has led some to fear it would make life more expensive in Delaware County.
The proposal, which must still make its way through the legislature, would lower the state sales tax rate by 0.5 percent and county sales tax rates by varying amounts, while expanding the base by taxing additional services.
Kasich’s plan would add dozens of previously exempt services or events to the list of those subject to sales taxes. That list would include funeral services, accounting, legal services and loan broker fees.
“Two guarantees in life are death and taxes,” State Sen. Kris Jordan (R-Ostrander) said. “I hope we don’t plan to tax both of those now.”
Services used by many county residents also are on the list, including the cutting, coloring or styling of hair, garbage collection and cable television.
“I do have concerns with dramatically expanding the sales tax base to include a lot of new items that normal families use every day,” Jordan said.
While Jordan expects the proposal to be altered by the legislature, local business leaders possibly affected by the plan are bracing themselves for its impact.
Delaware County Agricultural Society Board of Directors President Al Myers said if the proposed 5-percent sales tax on admission to fairs remains intact, ticket prices are likely to increase at the Delaware County Fair.
“It’s going to be an additional cost to the patrons at the fair and cost us additional man hours to keep track of it,” he said. “Both as a business owner and the president of the fair board, I don’t think its a wise move in today’s economy.”
Proposed taxes on several services related to real estate transactions could have a paralyzing effect on a gradually improving housing market, fears Stephanie Cashman, an agent with Delaware Realty Co.
“It’s going to be hard to have our market turn around if we have a sales tax on top of all the other costs of buying and selling,” she said. “The sellers are going to have less equity to work with, so they can’t take that money and purchase the next house. If it’s put on the buyer, it is going to give them less buying power.”
As a nonprofit organization, The Strand Theater is exempt from taxation. Manager Kara Long hopes that remains the case under the governor’s proposal, which would levy a 5-percent charge on the rental of films and tapes by theaters.
“If it is on the ticket price, it would have to be passed along to the consumer, unfortunately,” she said.
Bill Rodgers, a partner at the accounting firm Wolf, Rodgers and Dickey Co., called the idea of adding sales tax to the total cost of tax preparation “bizarre.”
“I do find it a little odd that the state of Ohio would charge sales tax for individuals that are hiring professional help to comply with taxation,” he said. “It’s a little bit of getting you coming and going.”
State Rep. Andrew Brenner (R-Powell) also expects significant changes to the proposal before it makes its way back to the governor’s desk.
While he supports the goal behind the plan, he believes the state income tax should be eliminated before expanding the sales tax base.
“I like the idea that he is trying to change the tax code and lower rates in the long run,” Brenner said. “I’m not exactly sure this is the method he should be using.”
As part of the governor’s proposal, local sales tax rates also would be reduced to avoid a $700 million tax increase the governor’s office says would be harmful to the economy. Delaware County would see its rate fall from 1.25 percent to 0.80 percent.
Despite that reduction, which would be locked in for three years, the governor’s office says counties would see their sales tax revenues grow by 10 percent annually over that time due to the broadening of the base.
“What (the governor) is trying to do is make our state more economically competitive and that should be applauded,” Delaware County Commissioner Gary Merrell said.