Plan to Expand Sales Tax Could Impact Ohioans in Dozens of Ways

Ohioans need only to look at their everyday lives for examples of how Gov. John Kasich’s plan to expand the state sales tax could affect them. The plan, proposed by Gov. John Kasich to help pay for a 20 percent cut in the state’s income tax, would both cut the sales tax rate and extend it to nearly all service purchases.

Selling a house? You’ll have to pay the tax on services from property sales agents.

Downloading a book? The cost of that service would be taxed.

Going to a sporting event? The admission would be taxed.

Kasich’s sales tax plan is part of his proposed two-year budget for Ohio. Hearings on that budget began Tuesday in the Ohio House.

The governor proposes to reduce the sales tax from 5.5 percent to 5 percent. At the same time, its scope would be broadened to cover services. Overall, it is expected to be a net gain of about $3 billion over the two years.

Because broadening the tax base would mean a windfall in sales taxes for Ohio’s 88 counties and the eight transit authorities that have piggyback taxes, Kasich’s plan would roll back their tax rates to a level that would guarantee 10 percent increases for two years and a 15 percent increase in the third year. Cuyahoga County’s rate, for example, would be rolled back from 1.25 percent to 0.80 percent.

Tax Commissioner Joseph Testa said earlier this week that broadening of the tax base recognizes that what was once a goods-based economy is now a service-based economy.

“About two-thirds of all consumption is services. The tax code has never been updated to address that,” he said.

There are exemptions — generally services deemed to be essential parts of daily life, said Gary Gudmundson, a spokesman for the Taxation Department.

Those include services that deal with health and well-being, such as day care, medical and dental services and social assistance services. Housing-related services, ranging from rents to utility costs to labor for work done in a residence are also exempt, as are educational services such as preschool and tutoring.

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