Senate Committee Bill Would Cap Commercial Activity Tax, Positioning it for Inevitable Decline

May 31, 2005
   

Ohio s proposed Commercial Activity Tax (CAT) on businesses, which in its House
version already did not raise as much revenue as the taxes it is to replace, has been further
weakened in the bill now pending before the Senate Finance Committee. This version of
the bill permanently caps total revenue collected at a predetermined level after fiscal year
2010, so that it inevitably would decline in relation to the economy and as a share of state
revenue. The Senate committee also added more credits and exemptions. These two
sources of erosion will undercut CAT revenues significantly and belie the claim that it is
a broad tax relatively free of special-interest provisions.

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