43
Senate bill would simplify municipal income tax systems
By Marc Kovac
COLUMBUS
The Ohio Senate began hearings Thursday on long-debated legislation aimed at simplifying the state’s municipal income tax systems.
And the head of the chamber said he expects passage of the proposed law changes before the end of the year.
“House Bill 5, I do anticipate we will vote on,” said Senate President Keith Faber, R-Celina. “I just think that municipalities need to understand that there are a lot of Ohioans concerned about the administrative burdens placed on taxpayers because of some of the inconsistent provisions.”
HB 5 would synchronize filing extensions, penalties, due dates and code definitions for Ohio’s various municipalities, replacing an existing system in which tax-filing rules and requirements are different from city to city.
The practical result, Rep. Cheryl Grossman, R-Grove City, told members of the Senate’s Ways and Means Committee on Thursday, would be uniform tax filing forms and rules in place statewide, though municipalities would continue to set their own tax rates.
The legislation does not call for the centralized collection of municipal income taxes.
Proponents say the bill is an attempt to update and simplify municipal tax filing requirements in a state where nearly 600 different municipalities are using about 300 different forms to collect income taxes. Some businesses, Grossman said, have to file two dozen or more local forms annually, at times paying tax bills that are less than the cost of mailing the paperwork.
“The basis for good tax policy should include simplicity and predictability,” she said. “Neither is currently found in Ohio’s municipal income tax code. Ohio has the most complicated and illogical local income tax system in the United State of America.”
Chambers of commerce, accountants and other industry groups are supporting the legislation, citing the burden the existing tax system poses businesses and individuals.
“Ohio is the only state that permits each of these government entities to create and enforce its own rules and regulations regarding the amount of taxation, the collection process and the compliance parameters,” Bill LaGuardia, chief executive officer of Youngstown-based LM Engineering Inc., said in testimony submitted to lawmakers Thursday. “This results in literally hundreds of different regulations unique to each entity. Ohio businesses and workers must research, understand and comply with each one.”
But HB 5 has prompted concern by the Ohio Municipal League and others, who say the legislation would lead to less local control and potential reductions in local tax collections.