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12/28/2015

Governor insists he won't give up on extending sales tax to services

Even though extending the state sales tax to services has been rejected twice by the Ohio General Assembly in recent years, Governor John Kasich said last week he will not give up on the idea.

Speaking to the Westerville Area Chamber of Commerce, the governor said he wants to further reduce the state income tax but to pay for it other taxes will have to go up.

According to a report in the Columbus Dispatch, "Kasich stressed the need to broaden the sales tax in an effort to further reduce the state income tax, and said he will continue pushing to do that despite some resistance from lawmakers."

"We have to tax consumption and reduce risk-taking, investment and job creation (taxes)," Kasich said.  "That's just the way it has to be.  And that's tough.  We've got members who say, 'not me, somebody else.'  But we have to lead on this."

ACEC Ohio worked with a large coalition of business and professional groups to defeat proposals to extend the sales tax to services which were included in the administration's budget proposals in 2013 and earlier this year.

In testimony to legislative committees over the past two years, ACEC Ohio has explained that further reducing the state income tax will not magically prompt engineering firm owners to hire additional staff and that only an improving economy will have this result.

Extending the sales tax to engineering and other services will only make Ohio firms less competitive with out-of-state firms, which will lead to job losses in the design industry – exactly the opposite result the governor says he wants.

Kasich did not indicate whether he will attempt to resurrect the sales tax proposal in 2016 as part of a mid-biennium budget corrections bill or whether he will wait and include it in the final biennial budget proposal he must present to the legislature in 2017.

Regardless, members of ACEC Ohio can be assured that, working with other members of the Ohio Service Industry Council, the Council will continue to strenuously oppose any effort to extend the sales tax to services.


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