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State tax 'holiday' draws ire of county

Nothing hurts a county budget director more than seeing his tax dollars take a holiday.

That's exactly what's going to happen if the Ohio legislature passes a two-day tax holiday that would take effect next year.

“Who's the state to say the county has to forgive our sales tax,” asked John Zeitler, Lucas County's budget director. “If the state wants to do theirs - that's fine, but why are they putting it on the counties without consulting us?”

Just how much money the county loses depends on what emerges when the Ohio Senate and House members get together after Thanksgiving to reconcile differences in their respective bills designed to eliminate the state's $1.5 billion deficit.

The House version calls for the tax holiday to be held Jan. 26-27 and would allow goods to be purchased free of the 6.25 percent sales tax collected in Lucas County. It would exempt items such as automobiles, boats, and restaurant meals.

The state gets 5 percent of the tax, while Lucas County collects 1.25 percent.

It would cost the state an estimated $27 million in tax revenue, while Lucas County would lose $266,000 based on numbers from last year.

The Senate version is more modest, calling for the holiday to apply only to clothing and footwear, for up to $200 per item, said state Rep. Lynn Olman (R., Toledo). The Senate wants the holiday in March.

Mr. Olman is a big fan of the House version and said the Senate version isn't worth doing. He said he supports the holiday because he thinks it will stimulate a sagging economy, even if it takes money from the taxman.

“To make money, you have to spend money,” Mr. Olman said. “We're trying to stimulate buying, give a tax break to citizens, and try to help give whatever jumpstart we can to the economy.

“And anytime you can take money away from government, it's the most fun you can have and still be legal.”

Sandy Isenberg, president of the Lucas County commissioners, doesn't find much fun in the proposed holiday, especially when declining sales tax revenues are leading to a very tight budget for next year.

She and her colleagues have been telling county officials that there's going to be little growth in the county's $132 million budget next year because sales tax collections are down $2.3 million from projected estimates this year.

The sales tax makes up just over half of the county's budget.

“There has to be better ways to stimulate the economy than taking it out of large urban counties that have been hit every which way,” Ms. Isenberg said.

Her counterparts around the state share her lack of enthusiasm for the tax holiday idea.

Doug Putnam, research and information manager for the County Commissioners Association of Ohio, said the House version would cost counties across the state a combined $5.4 million. He said the proposal is a gimmick.

“It's an attractive thing to have on your resume if you're a legislator,” Mr. Putnam said. “You can say, ‘I stopped the sales tax for two days.'”

Mr. Olman said if the federal government gives money to the states through its economic stimulus package, he'll push for the counties to be held harmless from the tax holiday.

He knows counties would lose money from the holiday, but said people opposed to it are being shortsighted. He said the plan would get people shopping, which will keep employees working and manufacturers producing.

Julie Oswald, who owns the Appliance Center in Maumee with her brother, John Oswald, said she thinks a tax holiday would cause a big bump in business.

“I think overall people are really excited about it,” Ms. Oswald said. “I've had a lot of customers say maybe they'll buy a big screen TV or a freezer for the garage.”

But she hopes people won't put off making big purchases during the real holiday season just to take advantage of a tax holiday in January.

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