Tax expenditure group recommends no changes, sets agenda

By Leah Neff, OSCPA Government Relations Intern

The state Tax Expenditure Review Committee on Nov. 13 released its first report on credits, deductions and exemptions that all together cost the state more than $9 billion in foregone revenue.

The committee recommended no changes for now on the first 15 tax expenditures in Ohio’s sales/use tax (codes 1.01 – 1.15), but released a to-do list of expenditures for future Ohio General Assemblies to consider.

The committee is charged with reviewing each of Ohio’s nearly 130 tax expenditures over an eight-year period. While the state’s goal is for revenue losses to be made up by the economic growth they stimulate, it still must consider whether other taxes have increased to absorb these losses, or, on the positive side, if the expenditures have increased another revenue source to balance them.

“We advocated for the legislature to take a hard look at Ohio’s nearly 130 tax expenditures in our 2016 Tax Reform Task Force report,” said Greg Saul, OSCPA’s director of tax policy. “We look forward to a more thorough process in the coming years.”

This week’s Tax Expenditure Review Committee report was criticized by multiple committee members, including State Rep. John Rogers, D-Mentor-on-the-Lake, and State Senator Vernon Sykes, D-Akron, who voted against it, as well as Senator John Eklund, R-Chardon, and Rep. Gary Scherer, CPA, R-Circleville, who voted for approval but encouraged greater data use and refinement in future reviews. Both the Buckeye Institute and Policy Matters Ohio offered comments claiming the report lacked diligence and needed further examination.

The committee has finished its work for the 132nd General Assembly of Ohio, but has recommended the following schedule for the 133rd, 134th, and 135th:

133rd General Assembly: Remainder of Ohio’s Sales and Use Tax Expenditures (Tax Expenditure Report codes 1.16 through 1.56)

134th General Assembly: Ohio’s Individual Income Tax Expenditures (Tax Expenditure codes 2.01 through 2.37)

135th General Assembly: Ohio’s Financial Institutions Tax Expenditures (Tax Expenditure Report codes 3.01 through 3.03)

Ohio’s Commercial Activity Tax Expenditures (Tax Expenditure Report codes 4.01 through 4.20)

Ohio’s Public Utility Excise Tax Expenditures (Tax Expenditure Report codes 5.01 through 5.03)

Ohio’s Kilowatt Hour Tax Expenditure (Tax Expenditure Report code 6.01)

Ohio’s Insurance Premium Tax Expenditures (Tax Expenditure Report codes 7.01 through 7.03)

Ohio’s Cigarette and Other Tobacco Products Tax Expenditures (Tax Expenditure Report codes 8.01 through 8.02)

Ohio’s Alcoholic Beverage Tax Expenditures (Tax Expenditure Report codes 9.01 through 9.04)

For more information, contact Greg Saul, or read the report in its entirety.