Businesses plead to be spared sales tax

Retailers, others pack hearing on Kasich plan to expand fees

3/7/2013

COLUMBUS — Lawyers, publishers, laundries, retailers, and a long list of others packed a Statehouse hearing room Wednesday to fight Gov. John Kasich’s plan to greatly expand Ohio’s sales tax base to a litany of professional services.

“How many millionaires come in to use your coin-operated laundries?” Rep. Tom Letson (D., Warren) asked Duane King, owner of LMARIES Laundromat in Bowling Green.

“Not many I know of,” said Mr. King, who doubles as volunteer president of the Ohio Coin-Operated Laundry Association.

One by one, the line of “special interests,” as Mr. Kasich has dubbed them, urged the House Ways and Means Subcommittee to put them on the do-not-tax list.

Mr. Kasich has proposed greatly expanding the sales tax base to affect such things as cable television, legal services, lobbying, accounting, architecture, engineering, investment and debt counseling, haircuts, advertising, and magazine subscriptions.

The revenue derived from the expansion would be partly offset with a half-penny reduction in the tax rate to a nickel on the dollar.

A combination of the extra sales tax money and tax hikes on shale oil and natural gas would underwrite a net $1.4 billion income tax cut over three years. The rate for individuals would be cut by 20 percent while small businesses would see their taxes halved on their first $750,000 in profits.

Lawmakers on both sides of the aisle oppose aspects of Mr. Kasich’s sales tax expansion.

The subcommittee is considering it independently of the other provisions of Mr. Kasich’s tax package, but they know that changes made to one would affect the other.

Mr. Kasich has made the income tax cut the cornerstone of his $63.3 billion, two-year budget proposal.

Mike Needler, president of the Findlay-based small grocer chain Fresh Encounter Inc., said added costs for credit card swiping, advertising, marketing, and other services will drive up costs in what is already a small profit margin business.

Competition with large chains like Walmart and Kroger would make it difficult for him to pass those costs onto his customers, at least in the short run, he said.

Although the subcommittee concentrated only on the sales tax portion of the plan, Rep. Nan Baker (R., Westlake) asked whether Mr. Needler would ultimately break even once the half-penny cut in the sales tax rate and 50 percent cut in the chain’s income tax bill are factored in.

“It does not balance,” Mr. Needler said.

Those testifying offered up multiple reasons why they should not be taxed. Lawyers argued that the tax could be an unconstitutional infringement on access to legal counsel.

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