Representatives Cheryl Grossman (R-Grove City) and Michael Henne (R-Clayton) have once again introduced legislation to create uniform rules for income withholding and taxation among all Ohio cities. The measure was one of the Republican majority’s first 10 bills of the new session; introduced as House Bill 5 on January 30, 2013. As with last session’s House Bill 601, the legislation has been the subject of praise from business interests but criticism from local communities.
House Bill 5, much like the previous bill, institutes uniform deadlines and definitions for the municipal income tax, but does not impose centralized collection. The sponsors have stated that uniform rules will make Ohio’s business climate more competitive by reducing businesses’ administrative costs in preparing and filing tax returns with multiple cities. The Municipal Tax Reform Coalition, a partnership of 22 organizations representing individual business owners and workers, hailed the bill for providing a simpler set rules for businesses. The Coalition, which includes such diverse members as the Ohio Society of Certified Public Accountants, Ohio Chamber of Commerce, Ohio Association of Realtors and Ohio State Medical Association, released a statement saying, “Our current system is so complex, it often costs Ohio businesses more to comply than what they owe in taxes. This is the wrong way to do business. A simpler, more uniform set of rules and regulations will reduce paperwork, encourage better compliance with the law, and allow businesses to invest resources into growing and creating more jobs.”
But the Ohio Municipal League (OML) again has several objections to the bill, saying numerous provisions would cause “significant reductions in municipal income tax revenues” for cities and villages. The OML cited several changes as potential revenue hits to municipalities, including an “unfunded mandate” regarding the treatment of net operating loss carry forwards, a change in the definition of residency, severely restricting the ability of municipalities’ enforcement efforts and prohibiting current tax practices of communities’ ability to apply their municipal income tax to a whole segment of commerce within their boundaries. The OML stated that “For a number of our municipalities, the loss of revenue will reach into the millions of dollars, if this legislation were to be enacted.”
In announcing the first 10 bills of the session, Speaker Bill Batchelder (R-Medina) said the bills, while not part of an official House Republican “priorities list,” did reflect some of the bigger issues the House will face in the first half of the year, including workforce development efforts, improving the state’s tax climate, enhancing local government operation and improving health care. House Bill 5 has been referred to the House Ways and Means Committee, chaired by Representative Peter Beck (R-Mason). The Ways and Means Committee has yet to announce its first committee meeting of the year.
A copy of the bill can be found on the General Assembly’s website at: www.legislature.state.oh.us.