High on Taft's 2005 agenda: tax reform

Income, corporate-franchise and inventory taxes are all under review.
BEXLEY, Ohio -- Reforming the state's tax laws will be a top priority for Republican Gov. Bob Taft in 2005.
In a recent interview at the governor's residence, Taft, who's entering the last two years of his second and final four-year term, said revisions to the state tax system should help Ohio become more competitive with other states in attracting and retaining businesses.
"We're looking at the corporate tax loopholes," Taft said, without getting into specifics. "But we're also looking at more comprehensive tax reform."
Taft said his advisers are considering proposals that would broaden the state's corporate-franchise tax and eliminate loopholes or develop another type of unspecified tax for businesses.
Taft said he will also consider changes to Ohio's tax on business equipment.
The governor said he will propose tax reforms as part of the two-year executive budget proposal he will present the GOP-led Legislature early next year.
"It's still a work in progress," the governor said of his evolving tax-reform proposal. "This will be a very big priority."
Current two-year plan
Taft proposed broad tax reform as part of the current two-year $48 billion state spending plan that runs through June 30.
Some proposed reforms were included, such as simplifying municipal income tax filings and speeding up the elimination of the state's inventory tax, but many other proposed reforms didn't make it into the budget.
Taft said his administration will also examine and possibly propose changes to the personal-income tax system.
"Our income taxes are, overall, too high," the governor said.
Taft said he believes his proposed tax reforms could be better received this time around.
"We are working collaboratively with the business community and the legislative leadership," the governor said.
At least one legislative leader said he agreed that taxes will be a top issue when the next two-year Ohio General Assembly convenes next month.
"It's going to be a big priority," said state Sen. Bill M. Harris, an Ashland Republican who is to become the Ohio Senate president.
Harris said he's charged three veteran senators, including Ways and Means Chairman Ron Amstutz, a Wooster Republican, to work on revising the state's tax system.
Amstutz said he's trying to work with both the governor and House members on the issue as well as with the business community.
State officials could have their work cut out for them in developing a balanced state spending plan by next summer.
Some estimates project the next two-year budget period could face a multibillion-dollar structural deficit unless state spending is reduced, more revenues are found or both. Additionally, a temporary 1-cent increase in the state sales tax, included in the current two-year budget and which contributed about $1.3 billion annually to state coffers, is set to expire June 30.
Bond issue considered
On another issue, Taft said he's exploring the possibility of proposing another bond issue connected to his Third Frontier Project to boost high-tech employment in Ohio. Taft said his administration is exploring a potential November 2005 ballot issue.
Voters statewide rejected a Third Frontier bond issue in 2003.