Lawmakers begin discussion of Coalition backed muni tax bill

Members of Ohio’s House Ways and Means Committee on Wednesday began exploring the details of H.B. 5. It was the first hearing on the legislation that seeks to establish uniform income tax rules among Ohio municipalities.

Questions touched on issues ranging from definitional uniformity to revenue neutrality to residency requirements.

Joint bill sponsor Rep. Cheryl Grossman, R-Grove City, said the language in H.B. 5 “is a direct result of negotiations” between the Municipal Tax Reform Coalition – which is pushing for the legislation – and the Ohio Municipal League plus other city representatives.

H.B. 5 was introduced Jan. 30 with priority status. It seeks to establish a uniform municipal income tax system with one set of rules and regulations that apply to all Ohio cities that impose business and individual income taxes.

Ohio is one of only a handful of states where municipalities assess individual and business income tax, and the only state in the nation where almost 600 cities and villages create their own definitions of income and their own sets of rules and regulations.

“Someone asked me, ‘Isn't that the cost of doing business?’” said joint bill sponsor Mike Henne, R-Clayton. “The problem is, that's the cost of doing business in Ohio – not in other states.”

The result, Henne said, is that businesses and jobs wind up in other states.

Businesses providing goods or services in multiple jurisdictions are responsible for withholding and filing municipal income tax returns in potentially hundreds of municipalities, often spending more in tax preparation fees than what they actually owe in taxes.

Ways and Means Committee member Rep. Gary Scherer, R-Circleville, said at Wednesday’s hearing he has prepared taxes for 35 years. As a CPA, Scherer said he recently mailed 27 forms for 33 cities. The cost of postage exceeded the total tax liability

“This is a very complex issue,” said Barbara Benton, CAE, The Ohio Society of CPAs' president of governmental affairs, after the hearing. “I think the questions and comments today by legislators indicate their interest in getting into the details and cutting the red tape to improve the business climate in Ohio."

Business owners are encouraged to tell their state representative and state senator how H.B. 5 will alleviate burdensome regulations and help Ohio businesses thrive. To add your voice, sign the petition.