Former Ohio Tax Commissioner and current OSCPA Tax Legislation Policy Committee member Tom Zaino, CPA told an Ohio House subcommittee that the sales tax base expansion contained in House Bill 59 will put the state at a competitive disadvantage.
“Because so few states have a broad sales tax on services, if the overall goal of HB 59 is to drive economic development and job creation in our state, the sales tax expansion is going in the wrong direction,” Zaino said in his testimony.
Lawmakers are holding hearings on the various provisions of HB 59 – Ohio’s biennial budget – to work out a final version before a June 30 deadline. The provision in the bill up for discussion this week is an expansion of the sales tax base to potentially thousands of services – including accounting, legal and consulting. That idea has raised concerns among OSCPA members and numerous other organizations, who fear it will not achieve the intended results.
Zaino said though HB 59 contains some positive ideas, the sales tax expansion will create a myriad of unintended consequences. Zaino added that the proposal is “so unworkable that it overshadowed any positive impact the income tax reductions would provide.” He noted the increased financial pressure on businesses, increased costs for business-to-business and related party transactions, enforcement and situsing problems, and the competitive disadvantage for Ohio-based businesses.
Among those in attendance at Wednesday’s hearing was OSCPA President and CEO Scott Wiley, CAE. He said he was there not only to support the position stated by Zaino, but also to emphasize that the Society wants to help work toward a solution.
“Our members have stated a strong opposition to the sales tax provisions in HB 59,” Wiley said. “Tom represents all members today in sending a clear message that we are ready to work with the legislature and the governor to find a solution that is good for the state of Ohio.”
During a recent OSCPA survey on this issue, more than 80% of Ohio CPAs opposed an expanded sales tax on most services. In addition, almost two thirds of members who responded said the reductions in personal income tax and tax on pass-through entity owners are not enough to counter the negative impact of the sales tax expansion proposal.
In response to the survey and other input from members and the Governmental Affairs Advisory Council, the OSCPA Executive Board voted March 5 to officially oppose the sales tax expansion to most services as contained in HB 59, and to offer OSCPA as a resource to assist lawmakers in their efforts to make Ohio a leader for job creation and retention, and a state where people want to work and live. Read the special member alert.