Strickland plan upsets business organizations

Mahoning vendors would lose money under the governor's proposed budget.
By MARC KOVAC
VINDICATOR CORRESPONDENT
COLUMBUS -- Business groups lashed out at a proposal in Gov. Ted Strickland's biennial budget that they say will cost retailers -- and, ultimately consumers -- millions of dollars.
"This is a hidden tax," said John Mahaney Jr., president of the Ohio Council of Retail Merchants. "You can call it anything you want. The merchants that have that 37 million per year now, they need it. And they're going to get it.
"And the only way they can get it is to increase prices. The public... will be paying," Mahaney said Thursday.
Retailers are allowed to claim an allowance against their annual sales as a means of offsetting costs associated with collecting and remitting sales tax to the state.
The current rate is 0.75 percent; under the governor's budget proposal, the rate would be increased to 1 percent but capped at 30 per return, says an analysis conducted by the state's Legislative Service Commission.
Mahaney, serving as spokesman for the 14 business groups, told reporters that the change is wrong and unfair and "shows gross ingratitude on the part of the state for vendors collecting about 6 billion a year in taxes." The business groups include, among others, the Ohio Chamber of Commerce, the Ohio Automobile Dealers Association and the Ohio Grocers Association.
Effects
Mahaney said 192,000 vendors statewide would be affected, adding 37 million total to their operational costs annually.
For example, a vendor in Mahoning County with 750,000 in annual taxable sales collected 48,750 last year in sales tax for the state and county. It was allowed to retain 438.75 of that total to offset collection costs.
Under the governor's proposal, that vendor would retain only 60, the retail merchants' council says.
Beyond the direct cost to retailers, the allowance change likely will prompt companies to consider surrounding states for new or expanding distribution centers.
Their allowances range from 0.83 percent (Indiana) to 1.75 percent (Illinois, Pennsylvania and Kentucky). The national average is about 3 percent, the council says.
"This sends absolutely the wrong message to anybody considering locating a facility in Ohio or expanding in Ohio," Mahaney said.
He added, "Where is it written that a state budget must go up every biennium? Is it some law we don't know about? ... I know there are many things in that budget that we could live very nicely without."
mkovac@dixcom.com