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State Looks to Pass New Municipal Tax Code

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The Ohio General Assembly’s consideration of a proposed statewide uniform municipal income tax delivered a multitude of concerns to Athens City Council during Tuesday night’s committee meeting.

The proposed legislation, House Bill 601, seeks to streamline the municipal income tax system into one set of rules for withholding and taxation, ultimately simplifying the taxpayer’s withholding obligations, according to the 129th Ohio General Assembly website.

According to At-large council member Chris Knisely, the Ohio Municipal League (OML) has asked cities across the state to consider a resolution in opposition to the bill.

The city of Athens’ tax income administrator Tina Timberman addressed the condensed report to council.

Timberman said that if the bill is passed, the city of Athens could see a fiscal loss of up to $200,000 per year, equal to 14 percent of the city’s business income. The biggest share of that cost, she said, would come from changing the city’s current tax assessment policy.

After combining previous losses in local government funds, tangible personal property tax and other cuts that have come from the state, Timberman projected local losses at the hands of the state to upwards of $1 million per year.

The Athens city prosecutors enforce the current tax assessment policy, Timberman added.

“We would go from having criminal proceedings to a civil process that I believe will reduce the amount of tax collections we have with no repercussions,” Timberman said.

Near the beginning of her report, Timberman cited the contradictory nature of the legislation, alluding to points made in separate sections of the legislation that negate each other. She noted the obscurity of the bill’s language and characterized it as overstepping the state of Ohio’s authority with municipalities.

“(This bill) is 129 pages of completely burdensome and unstructured language,” Timberman said. “It’s a wish-list for the coercion and special interest groups … I believe there is a complete lack of concern for revenue-neutral impact on municipalities.”

Athens City Auditor Kathy Hecht joined Timberman in expressing her concerns about the legislation, stating the bill would be burdensome to city officials if passed into law. She said it overcomplicates an otherwise simple process.

“They have taken a less than 40-page tax law and made it about 130 (pages) … it’s pretty complicated,” Hecht said. “We’re all different and we all have different issues. We see this when we get together with (Ohio’s) bigger cities. It looks like we are aiming toward centralization.”

The Ohio Association of Certified Public Accountants (CPA) and the Ohio Chamber of Commerce are driving the legislation, according to Hecht.

“(The CPA and Commerce) have met and have decided that our tax laws are burdensome for people,” Hecht said. “I don’t understand how they can justify that … burdensome local taxes is not a deterrent to job creation in Ohio.”

Although there is no objection to uniformity, Hecht said losing money with the way the legislation is drawn up on top of other cuts is “downright scary.”

Under the bill, Timberman said the only control the city would have over its current 1.65 percent municipal income tax would be over tax rates and credits, but nothing else.

The proposed legislation created a basis for frustration among council members, including Jeff Risner, D-2nd, who said the bill did not achieve any of its specified goals.

“Unless you got rid of taxes, (the bill is) really not having any effect,” Risner said. “If (the CPA and Commerce) really wanted to streamline government then the first thing they should do is get rid of the tax commissioner … this thing is ludicrous.”

The bill would additionally extend the time period employers can withhold city income tax, from the present 12-day grace period to 20 days, according to council member Chris Knisely, D-at large. She later added the extension could be “extremely detrimental.”

City Council unanimously opted to proceed with the resolution. Council now has to decide in regular session whether to support a resolution to join the OML in challenging the legislation.

The next steps in furthering opposition to the bill will be taken at the next OML meeting Dec. 7 in Columbus, according to Timberman.

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