Witnessed testified this morning before the House Ways and Means Subcommittee on Gov. Kasich’s sales tax plan, offering the first public testimony in support of the proposal since its February 4 introduction. Witnesses argued that the proposed sales tax expansion was needed, but cautioned that other provisions caused them to question the effectiveness of the overall reform plan.
Gavin DeVore Leonard with One Ohio Now said that his organization saw the merit in expanding the sales tax base, but suggested that any new revenue should be used to pay for needed public services. In the proposed budget, new revenue from the sales tax expansion is used to pay for an income tax cut that overwhelmingly favors the wealthiest Ohioans while making the tax code much more regressive
John Honeck, Director of Public Policy for the Center for Community Solutions, also testified that his organization supports the expansion of the sales tax, but has reservations about other tax provisions in the budget. Honeck suggested closing the tax exemption for magazine subscriptions and asked lawmakers to consider closing some of the bill’s other 183 exemptions.
Ashland County Commissioner Kim Edwards spoke on behalf of the Ohio County Commissioners Associations, and was the most outspoken opponent of the sales tax proposal. Edwards testified that the three year freeze on sales tax rates would tie the hands’ of county governments to pay for needed services and would override the will of voters.
All three witnesses expressed concerns about the sales tax proposal and offered suggestions on how to improve it. Mr. Honeck suggested lowering the sales tax rate even further would help mitigate some of the concerns associated with lower income individuals having to pay more in sales tax.
Both Mr. Honeck and Mr. DeVore Leonard suggested that the state should provide tax credits to offset a portion of the increased tax burden on individuals. Specifically, DeVore Leonard suggested that a state-based earned income tax credit would lessen the impact on low-income Ohioans.
Tomorrow, committee members will hear from witnesses opposed to the sales tax reform.