Oil industry gets a tax break in GOP-led Ohio budget plan
The plan comes at a time when lawmakers are trying to plug a deficit before July.
COLUMBUS (AP) — Ohio’s budget plan would give a tax break to the oil industry at a time when state revenue has plummeted, causing lawmakers to consider a gambling expansion and making major cuts to a range of programs.
The tax break, pushed by the Republican-controlled Senate, would exempt fuel distributors from paying Ohio’s business tax when they swap gasoline to ship it more efficiently. The Ohio Department of Taxation said Tuesday that the exemption would result in about $20 million less in state revenue each year.
“The Department of Taxation has been concerned about any attempt to narrow the base of the tax through loopholes or carve outs or exemptions,” said spokesman John Kohlstrand. “There is a slippery-slope concern.”
The oil industry said the swaps are exempted from the Commercial Activities Tax because no money changes hands, and they enable one of the most crucial public goods to be shipped at the lowest cost possible. In the swap, a gasoline distributor with a terminal in one location, say Columbus, swaps gasoline with a distributor with a terminal in Indianapolis, if both have retail customers that can be more efficiently served from the other location.
The push for the tax break comes at a time when lawmakers are scrambling to plug a $3.2 billion budget deficit before July. The state’s tax revenue, including from the business tax, has been drastically falling short of expectations because of the recession.
Gov. Ted Strickland announced his support Friday for a plan to put slot machines at Ohio’s seven horse-racing tracks — which he said would raise about $933 million over two years. He also proposed $2.4 billion in cuts, including to programs such as early-childhood education and behavioral-health services.
Business interests have begun to take aim at the Commercial Activities Tax, which was heralded by lawmakers as a fair, broad-based replacement to another tax that was riddled with loopholes and exemptions. The tax is levied on gross receipts, including on the fair-market value of any services or property received — which would include swaps, according to the Ohio Department of Taxation.