Ohio House Ways & Means hears ODT’s budget proposals

Hannah News Service contributed to this report  

The Ohio House Ways & Means Committee heard testimony from Tax Commissioner Patricia Harris on Feb. 19 as she presented the Ohio Department of Taxation’s budget proposals. 

She reviewed the tax policies proposed by Gov. DeWine in the executive budget, including creation of a child tax credit financed by tobacco tax increases and increases in the sports gambling and marijuana tax rates. 

She also noted technical updates to the state tax code, including changes to make the commissioner’s ability to abate penalties more uniform and authority for the department to provide electronic refund notices. 

Multiple committee members asked about tobacco tax revenue projections and whether they account for the idea that fewer people would use the products once taxes increase or the possibility of people moving their purchases to border states. Harris said the projections do account for decreased use. She said data on cigarette sales in Kentucky and Indiana following the last increase in taxes did not show an increase. 

Rep. Derrick Hall, noting the proposed tax increase on vaping products from 10 cents per mL to 20 cents, asked what level of increase would be needed to make the tax rate equivalent to that proposed on cigarettes. Harris said it would be something like $1.50 per mL. 

Multiple committee members also asked about the assertion that sports betting companies, rather than bettors, would pay the increased gambling taxes proposed in the bill. Chair Bill Roemer, CPA suggested the companies could change the odds available on bets. 

Rep. Dan Troy asked if the department had adequate staff for tax enforcement, noting the department headcount is down by several hundred people in recent history. Harris said she doesn’t need today the staffing levels the department had 15 years ago, saying systems and processes have changed to be more efficient, and the agency is still looking for further ways to reduce the use of paper and automate processing. 

Rep. Jack Daniels asked about the electronic refund notices, wondering if the department was convinced it could communicate securely with taxpayers. Harris said she is confident, saying the new tax system is built with that in mind and that the federal government audits her department to make sure it is protecting taxpayer data. 

Troy asked Harris to elaborate on ODT’s role in administering the property tax system, saying lawmakers had heard of “war” between the department and county auditors. 

“We’ve had our peace treaty talks,” Harris replied, saying leadership had changed in the agency’s tax equalization division, and staff there has been working on building relationships with local officials. She said the department is bound by the Ohio Constitution, law and rules to review county auditors proposed valuations, and uses sales data for comparisons when reviewing assessed values. 

Roemer asked about the proposed change from a percentage to a flat amount for the credit to tobacco wholesalers for the cost of administering tax stamps. Sarah O’Leary, assistant tax commissioner and chief counsel, said wholesalers would get a “windfall” from the tobacco tax increases under that credit even though the task they would be performing had not changed. Changing it to a flat credit represents a small increase from the present credit but prevents that windfall, she said. 

Rep. David Thomas said he believes there will be a push for more school districts to institute an earned income tax as complaints about property taxes increase. He asked if ODT systems are prepared to accommodate such an increase. Harris said the new system was built to be able to handle an increase, but the department could need more staff from such a change because of the number of people who still file paper returns.