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Municipal income tax uniformity bill shelved until January

By Sue Botos

Westshore

A proposal by the Ohio House to standardize municipal income taxes across the state’s 600 cities and villages has been put on hold until January.

Rocky River Mayor Pam Bobst recently told West Life that state officials have told legal counsel for the Cuyahoga County Mayors and Managers Association that no action will be taken on the measure, HB 601, until the House returns from its holiday break after the first of the year.

While groups such as the Ohio Chamber of Commerce and the Ohio Association of Realtors applaud the proposal, stating that it makes doing business in multiple communities easier, many municipalities have passed ordinances opposing the bill, noting it would make them powerless to govern their own finances.

Helping to drive the reform is the 19-member Municipal Income Tax Uniformity Coalition, which includes such organizations as the Ohio Society of CPAs, the Ohio Insurance Institute and the Ohio State Bar Association.

Currently, Ohio is one of only 10 states that allow their municipalities to assess and collect individual income tax. All of the states, except Pennsylvania, have eight or fewer cities collecting a municipal income tax.

HB 601 was introduced into the Ohio General Assembly on Oct. 30 by Republican Reps. Cheryl Grossman, of Grove City, and Mike Henne, of Dayton. Opponents have said that it will create tax cuts for certain individuals and interest groups, while reducing the ability of local governments to collect taxes. A seven-person board appointed by Gov. John Kasich will also approve a uniform municipal income tax return to be used by all communities. Presently, each municipality in the state has its own return.

Bobst noted that while understanding has been reached on basics, such

as uniform due dates, extensions and

estimated payments, there is less agreement among the state officials and

municipal leaders about other issues. These include the definition of taxable income and revenue from partnerships and S corporations, which do not pay federal income tax.

“We (mayors) felt that it is not drafted in the spirit of compromise and consensus,” said Bobst at a November City Council meeting. “Many of the things we thought we arrived at a consensus on are still on the table,” she noted.

Several cities in the Dayton area have passed resolutions opposing the measure. Locally, Lakewood recently approved such legislation. “HB 601 is yet another attempt to crush cash-strapped Ohio towns … by preventing us from enforcing the local tax laws that we have levied on ourselves,” said Lakewood City Council President Brian Powers in a statement.

City budgets have already suffered numerous state cutbacks, including the abolishment of the estate tax, which takes effect in 2013. Rocky River usually received over $1 million per year from the tax, and funds were used for city projects like the community center.

City Council is expected to address the uniform tax issue during its budget hearing process.

 

 

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