June 16, 2015
June 16, 2015
The biennial state budget is often stuffed with special-interest provisions, and this year is no exception.
One intriguing example: A proposed tax break clearly tailored to a single unnamed business complex. It is for a company that delivers parts or finished goods of “a personal care, health, or beauty product or an aromatic product, including a candle” to another company in the same supply chain. The two companies must “systematically collaborate and coordinate business operations with a retailer...” Oh, and they also have to be located in the same parcel or parcels of land totaling between 100 and 500 acres and in a county with between 150,000 and 200,000 people (of which there are six). How many companies do you figure will qualify?
Under this provision in the Senate budget bill, sales from one such vendor to another wouldn’t be taxed under Ohio’s main business tax, the Commercial Activity Tax. But that’s not all. The bill makes the change retroactive to July 1, 2005, when the CAT tax first became effective, “and shall be construed as clarifying the law as it existed prior to the effective date of that amendment.” So a decade after a new tax is approved, the Senate is “clarifying” that they really meant to give this tax break all along (in actuality, the Legislative Service Commission noted, it would be subject to a four-year limit on such CAT refunds). Still, prior to today’s amendment to the bill, the LSC pegged the cost at “probably several million dollars per year (see page 18)."
That same law in 2005 phased out the local tax on tangible personal property — machinery, equipment, inventory, furniture and fixtures, or basically, anything in a building but the building itself. The biggest beneficiaries were manufacturers. But it seems that the Senate wants golf courses to benefit, too. The bill would redefine as business fixtures — and thus tax-exempt — cart paths, irrigation systems and “structures affixed to or constructed over land that consist of soil and other natural materials requiring regular maintenance, that primarily benefit the business conducted on the premises...” Together with a provision that would revise how golf courses are valued for tax purposes, said the LSC, this “would likely result in loss of property tax revenue to school districts and units of local government.”
These are just a couple of the tax provisions lurking in the Senate budget bill. Another one just added in an amendment today would give a special tax break for premium cigars. Somehow, I’m not lighting up over them.
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