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02/20/2015

Ad tax expansion may lurk in language

Members urged to participate in tax reform survey

Dennis Hetzel Executive DirectorBy Dennis Hetzel, Executive Director

Today we are e-mailing all ONA publishers a survey we urge you to take. It will help us respond to the tax reform plan proposed by Gov. John Kasich in his 2015-16 state budget.

Now that we see the language in the bill (House Bill 64), we are much more concerned than we were after just reading the administration’s summaries.  While the expansion of the sales tax to services is quite modest compared to 2011, the language defining those services is extremely broad.  In two cases, the words can readily be interpreted to apply the sales tax to advertising and marketing expenses.

For example, the administration is proposing an expansion of the sales tax to lobbying.  Here is the definition of lobbying in HB 46: “ ... any activity that serves to influence the behavior of an individual, an industry or an organization.” (This, by the way, would add new expense to what ONA pays its government relations consultants on members’ behalfs.)

Here is the definition of public relations: “ … campaigns designed to promote the interest and image of one or more clients.”

Does that sound like advertising?  It sure does to us. Do you really want to leave interpretation of such language to future government officials who are expected to find every possible dollar?

Shown this language, ONA General Counsel Lou Colombo offered this comment: “I’d be worried.”

It’s not just our opinion.  Others in our coalition of media groups and major advertisers feel the same way. So does Tom Zaino, former head of the Ohio Department of Taxation under Republican Gov. Bob Taft.  Zaino, an attorney and lobbyist, issued a detailed analysis of the governor’s tax reform plan that is worth reading. He concludes that the plan will mean tax increases, not decreases, for many Ohio businesses.

This is why it is important that you respond to our survey, so we can understand the impact of items such as this:

  • A 23 percent increase in the CAT (commercial activity tax) rate on gross receipts.
  • A .5% increase in the overall sales tax.
  • Major tax reductions for certain small businesses.
  • An $83 per head surcharge per employee for unemployment taxes.
  • A major cut in personal income tax rates.

Perhaps all these changes are for the greater good and Ohio’s long-term growth. You’ll have a chance to answer a question about that as well.

You also can find our survey by clicking here.

Meanwhile, we have posted two other documents that are worth your time. One is our first Legislative Watch List for the 2015-16 session. The other is our legislative priorities document for the term

You will see that there are a lot of problems and, yes, opportunities in the area of open meetings and open records. But that’s a subject for another day.

In the meantime, please take our survey to help us assess the impact of these tax proposals on our members and their communities.

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