Wednesday, October 31, 2001

House GOP proposes sales-tax holiday

But governor, Senate react with little enthusiasm

By Spencer Hunt
Enquirer Columbus Bureau

        COLUMBUS — House Republicans advanced a plan Tuesday that would entice Ohio Christmas shoppers with a two-day sales-tax holiday.

        The plan would also raise some business taxes and is designed to help plug a $1.5 billion state budget deficit.

        House Speaker Larry Householder, R-Glenford, said he plans to pass the measure out of the GOP-controlled chamber today. Gov. Bob Taft and Senate President Richard Finan, R-Evendale, offered lukewarm reactions and no immediate support.

        Mr. Finan had several concerns about the plan, which would raise more than $500 million by taxing businesses and financial services that currently are exempt. He also questioned the need for and timing of a sales-tax holiday, tentatively scheduled for Dec. 15 and 16.

        “Clearly, we will have a lot of Christmas sales,” Mr. Finan said. “Most states that have tax holidays time them in August as going-back-to-school type issues.”

        Mr. Householder said he'd be willing to discuss changing his tax holiday proposal, but dismissed the notion of waiting until late summer to try to boost sales.

        “We think there is no better time than right now,” Mr. Householder said. “We want to try to influence people to get out and shop.”

        The sales-tax holiday would not include cars, boats and food purchases. All other purchases would be tax-free in Ohio.

        The tax holiday could cost the state about $35 million in lost revenues. Mr. Householder believes the state could make up the loss if it helps encourage a longer overall boost in sales.

        The proposal is the first and only legislative response to a fiscal alarm Mr. Taft sounded two weeks ago. Lower-than-expected sales- and income-tax revenues, driven down by the state's stalled economy, will leave Ohio's $44.9 billion two-year budget about $1.5 billion short.

        Mr. Householder's plan borrows heavily from a solution Mr. Taft asked lawmakers to support. It would increase budget cutbacks Mr. Taft originally imposed on state agencies by $50 million to $660 million over the next two years.

        The plan would lower the governor's proposal to use $279 million in state rainy-day funds to $195 million. It would also divert $240 million from the state tobacco settlement — $140 million more than Mr. Taft proposed.

        House lawmakers kept Mr. Taft's proposal to impose a new tax on financial trusts, to eliminate exemptions on certain transactions between businesses and on business' net operating losses.

        They rejected a proposal to tax toll-free numbers that businesses offer customers. Also discarded was a plan to let Ohio join a multistate lottery to raise another $41 million over the next two years.

        The plan would instead raise taxes on electric power utilities, repeal a state tobacco stamp discount and repeal sales-tax exemptions on junk mail and on sales of rare coins and precious metals.

        While the governor praised House lawmakers for moving ahead on the budget, he declined comment on the sales-tax holiday.

        “It's an idea I just heard about last night,” he said.


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