OHIO BUDGET Lawmaker suggests ending business tax

A subcommittee has also recommended removing personal property tax on furniture.
By JEFF ORTEGA
VINDICATOR CORRESPONDENT
COLUMBUS -- Ending the tangible personal property taxes currently levied on business machinery and equipment should be a priority for an Ohio House committee, a lawmaker says.
The committee is studying the state's proposed next two-year budget.
"If we did nothing else but that we would be making a monumental change in this state," state Rep. Sally Conway Kilbane, a Rocky River Republican, said Tuesday.
Kilbane, the chairwoman of the House Ways and Means Committee, briefed the House Finance & amp; Appropriations Committee on her panel's recommendations on the tax portion of Republican Gov. Bob Taft's proposed two-year, $51.3 billion state budget.
In addition to keeping Taft's proposed phase-out of the tangible personal property tax on machinery and equipment, Kilbane's committee, acting as a subcommittee of the finance panel, has recommended extending the phase-out to the personal property taxes levied on furniture and fixtures. Kilbane said the move could cost the state about $344 million in forgone revenue over five years.
Kilbane said majority House Republicans are still trying to figure out ways to make up the revenue as the finance committee continues to scrutinize Taft's proposed spending plan.
The current two-year, $48 billion spending plan runs through June 30. Lawmakers must enact the new state budget by July 1, under state law.
"It's a hindrance to investment in Ohio," Kilbane said of the tangible personal property tax. "That thing has to go."
Committee suggestions
Kilbane said her committee recommends minor changes to the Taft tax-reform plan, which also would scrap the state corporate franchise tax and replace it with so-called "commercial activity tax" on business receipts.
Taft's tax proposal also would cut state personal income tax rates by 21 percent across the board and reduce the current sales tax rate from 6 percent to 5.5 percent beginning July 1 to help offset tax reform.
Kilbane said her committee recommends scrapping a nominal fee proposed by Taft on companies to be taxed under the commercial activity tax and other minor changes.
Taft spokesman Mark Rickel said the governor was pleased that Kilbane's committee recommends keeping most of Taft's tax proposal intact.
"It's clear that the subcommittee has embraced the fundamental principles of the governor's tax-reform plan," Rickel said.
Rickel said the governor had no further comment until the governor and his advisors get a chance to study the recommendations which, along with recommendations from other subcommittees, could be incorporated into the state budget bill the full House considers in the coming weeks.
Once passed by the House, the Senate must still consider the proposed spending plan.