Oberlin leaders are letting the state know they are strongly opposed to Ohio Gov. John Kasich’s proposed biennial budget.
City council unanimously passed a resolution April 3 stating its stance against the budget, which proposes centralized collection of net profit tax returns.
In other words, if the budget passes as written, all business net profit returns will go to the state department of taxation for filling, payment, and processing.
“If adopted, this is obviously yet another step towards state takeover of the municipal income tax collections, further eroding home rule,” Oberlin finance director Sal Talarico said in a memo to council. “It will significantly affect cash flow for municipalities related to NP returns. It will reduce the ability to ensure all taxpayers are paying their fair share.”
Additionally, the bill aims to also eliminate the sales throwback rule.
If the rule is eliminated, in sales where the seller delivers goods to a place where the seller is not — such as with online sales — the sales tax would be allocated to the municipality where the goods are delivered. Currently, the sales tax allocations are “thrown back” to the location from which the product was shipped.
“The mounting pressure has already begun to have an effect on the legislature. I can’t guarantee, but it looks like they might do the right thing and pull it out of the budget bill,” Talarico said while addressing council during the meeting. “This doesn’t belong in the budget bill. It should get its due process outside of the budget process.
“That’s what we’re hoping for: that they pull it out and get the discussion going.”
The Regional Income Tax Agency, the Ohio Municipal League, and other statewide organizations, along with municipal governments from both parties are fighting the proposal, according to Talarico.
“The business gateway they’re proposing to use doesn’t work. It’s been broken for years,” Talirico said. “The local tax preparers shared with me that when they call the Ohio Department of Taxation, they’re lucky if they get a response back in a week or two, or more. If they call the city or RITA, they get a call back the same day, or the next.
“I don’t believe the state is in any position to take over any portion of municipal income tax collections.”
Scott Mahoney can be reached at 440-775-1611 or @sm_mahoney on Twitter.