Bills would extend tax break to more Ohio cargo hubs

9/17/2005

COLUMBUS State lawmakers are introducing bills to extend special tax treatment for a Columbus cargo hub to similar operations statewide.

Eight federally recognized foreign trade zones, including those operated by the Toledo-Lucas County Port Authority and the Findlay-Hancock Chamber of Commerce, have objected to an exemption under Ohio s new commercial activities tax on business gross sales that was slipped into the state budget and narrowly tailored to apply only to Rickenbacker Airport south of Columbus.

The federal government imposes lower excise taxes on goods and parts that are shipped into a foreign trade zone and then assembled or repackaged for resale. Ohio provides a similar exemption from its tangible personal property tax that, among other things, taxes business inventory.

But Ohio s foreign trade zones are gradually losing that state tax advantage as the $52 billion, two-year budget that went into effect July 1 begins to phase out the inventory tax in favor of the new commercial activities tax. Only Rickenbacker has been granted an exemption under the replacement tax, a move its competitors say gives it an unfair advantage in marketing to importers and exporters.

The language applied the exemption only to goods in a foreign trade zone that includes a trans-shipment station capable of handling freight by rail, highway, and air. Only Rickenbacker fits that description.

We re trying to continue a favorable program to attract companies to our FTZ, but we re looking to level the playing field here too so everybody in Ohio is given the same opportunity, said Rep. Mark Wagoner (R., Ottawa Hills), whose bill expanding the exemption will be introduced in the House Tuesday.

Sen. Eric Fingerhut (D., Cleveland), who otherwise opposes the new tax, is preparing a similar bill in the Senate.

Preliminary estimates are that expansion of the exemption statewide would cost the state $10.1 million this year and $34.3 million if fully implemented by 2010, according to Mr. Wagoner.

While a number of lawmakers opposed the exemption, they succeeded only in getting a two-year expiration stamped on it.

The lieutenant governor has maintained the CAT tax won t have an impact on business in Ohio, Mr. Fingerhut said. But why did they agree to this exemption for a Columbus foreign trade zone? It shows they know the tax is an impediment.

Lt. Gov. Bruce Johnson (R., Columbus), who doubles as state development director, generally opposed exemptions in the budget debate but has not taken a position on whether the narrow Rickenbacker exemption should be expanded. There have been meetings on the issue involving lawmakers, members of the Taft administration, and the trade zones, including Rickenbacker. Clearly, the status quo is something I don t support, said Sen. Randy Gardner (R., Bowling Green). Enough time has gone by that there ought to be some legislative debate and hearings.

Contact Jim Provance at: jprovance@theblade.com 614-221-0496.