House Bill 5
City gears up objection to tax collection changes
Whitehall is opposing a proposed Ohio House bill that would change how the state's municipalities collect income tax.
Whitehall Mayor Kim Maggard said the legislation would have a negative impact on Whitehall and most other Ohio cities, but proponents of the bill say when viewed as a whole the new policy will benefit businesses and municipalities alike.
House Bill 5, sponsored by Ohio Rep. Cheryl Grossman (R-Grove City) and Rep. Mike Henne (R-Vandalia) is known as the Municipal Income Tax Uniformity bill.
Grossman and Henne introduced the bill in the House Ways and Means Committee. According to a Feb. 15 legislative bulletin of the Ohio Municipal League, sponsors of the bill, at a Feb. 13 meeting to provide sponsor testimony, reiterated that central collection of municipal income tax revenue is not part of the bill.
But questions were raised concerning whether the legislation was "revenue neutral" as proponents say, or whether it would result in loss of income tax revenue to many Ohio cities.
Legislators also asked for a detailed comparison of differences in House Bill 5 compared with that of a similar House bill proposed last year that failed to make it out of committee.
No future hearings have been scheduled and the timeline for House Bill 5 is not clear, according to the legislative bulletin.
"This will simply hurt Whitehall," said Maggard, who prepared a city resolution "strongly opposing the passage of House Bill 5 by the Ohio General Assembly."
Whitehall City Council members were expected to adopt the resolution at their regularly scheduled meeting Tuesday, Feb. 19 at Whitehall City Hall.
Maggard said passage of the bill could take as much as $250,000 annually in income tax revenue from the city's coffers through a number of changes in how such revenue is collected.
"It's meant to help businesses ... but it takes money away from cities," said Maggard, adding that business in Ohio is growing, an indication that businesses need no such incentive to relocate or expand in Ohio.
Grossman said Feb. 18 that despite an above-average economic climate in Ohio that the state remains the most challenging for business owners, especially those whose employees work in multiple places such as contractors, utility companies, and media.
"It's the biggest complaint we hear -- that we are unfriendly for businesses," said Grossman, a former mayor of Grove City.
Grossman said business owners, in the process of annual tax preparations, have upward of 300 different tax forms to file
"No other state even comes close to the number of different tax forms, filing deadlines, and other (local) income tax policies to follow," Grossman said.
Among the proposed changes House Bill 5 would enact is an increase in the minimum number of days an employee must work before paying income tax to a specific municipality.
Currently, any employee who works at least 12 consecutive days in Whitehall is subject to income tax, but House Bill 5 would increase that number to 20 for all Ohio cities.
"We have a lot of contractors that work in our city, so that change would hurt us," Maggard said.
The proposed bill also allows a business that disputes an income tax issue to appeal cases to a county municipal court rather than a magistrate, something Maggard said will cost cities more and inundate county courthouses in Ohio.
Maggard said it will cost the city more, either as a plaintiff or a defendant, to try such cases in municipal court rather than a mayor's court.
The bill also allows businesses to spread a net loss in a single year across as many as five years, another component Maggard opposes, and sets a uniform filing deadline.
Grossman said when all the changes are considered as a whole, almost every city would realize a net gain in the amount of income tax revenue.
"Even where a city might lose revenue in one area, it would be gained in another where it was not being collected," as the bill is designed to be "revenue neutral," Grossman said.
Among the more challenging aspects of House Bill 5 is defining "preponderance of a day," a term that defines where an employee, working in multiple cities such as a cable TV technician, owes income tax.
"We need to clearly define, across the state, income tax policy to benefit the cities and to make Ohio more user-friendly and business friendly," Grossman said.