By Rick Palsgrove
Groveport city officials do not favor Governor John Kasich’s proposal to place business income tax collection under the state’s centralized control rather than keeping it under local municipal control.
When asked if she sees the governor’s proposal as a challenge to the concept of municipal local control, Groveport City Administrator Marsha Hall replied, “Most definitely.”
“Our biggest issues are whether the state will be able to track our businesses like we can, and if the state will be able to correctly divide payments between municipalities for those businesses who currently file in multiple locations, but under the new system would just file with one form to the state,” said Hall.
Under the governor’s plan, which is included in his proposed state budget and would still have to be approved by the state legislature before becoming a reality, the state would set up a centralized system to collect business income taxes and then distribute tax receipts to the intended municipalities.
According to a press release from the governor’s office, the business benefits of such a system are: uniformity and simplicity with one return, one place to file, one set of rules, and one audit rather than various sets of rules and filing requirements from various municipalities; and reduced cost of compliance, bookkeeping, paperwork and red tape.
The municipal benefits, according to the governor’s press release, would be: reduced administrative costs as the Ohio Department of Taxation would retain only 1 percent of the collections as opposed to the 2.5 to 3 percent often charged to cities by third party administrators; increased compliance and collections through enhanced screening; and municipalities would retain control of tax rates and credits.
Hall said Groveport currently uses the city of Columbus for its business income tax collection.
“We have an excellent relationship with the city of Columbus taxation department and are able to discuss any tax related issues by just picking up the phone,” said Hall.
Hall wants to know how many Ohio businesses actually have to file in multiple locations. She said having a uniform filing form all municipalities use would not be an issue.
“In our case we would save less than 0.25 percent for the administration cost (under the proposal),” said Hall. “We currently pay the city of Columbus a little under 1.25 percent for administration and the state says they can do it for 1 percent. I believe our current system is excellent in tracking the revenue we are to be getting. I don’t have faith that the state can do as good of a job, much less a better job.”
In regards to the state screening and cross checking of tax returns, Hall said Groveport currently contracts with professional tax accountant and consultant firm Curtin and Associates LLC to perform this function.
“We do not believe that a state agency would provide as complete screening and cross checking as we currently have with Curtin,” said Hall.
She said another issue for the state is it is widely reported that the Ohio Business Gateway, the system used by the state for filing, if used by all Ohio businesses, would need to be upgraded.
When asked what the financial affect the governor’s proposal would have on the city of Groveport, Hall said it is difficult to know just yet.
She said the proposal would have no impact on the amount local businesses or businesses planning to come to Groveport would pay in income taxes.
Hall said Groveport’s main objection to the proposal is “lack of control.”
“Although this is difficult at this point since so much is unknown,” said Hall. “The first hearing on this proposal was just held recently. Also, when the bill was passed modifying income tax regulations in Ohio, the state assured the municipalities that centralized collection was not part of their plan. I would imagine the next step after centralized collection for business net taxes will be centralized collection for all.”
She said Groveport will make its objections to the proposal known to the state government.
“We will continue to work with the Ohio Municipal League in expressing our concerns once we have a better idea of the state’s plan,” said Hall.