Friday, November 09, 2001

Ohio could collect car-lease tax up front

By Andrew Welsh-Huggins
The Associated Press

        COLUMBUS — Ohioans who lease vehicles would pay taxes up front, instead of month-by-month over the course of the lease, under a proposal by Senate Republicans to help fill a $1.5 billion budget deficit.

        The Senate Finance Committee is also considering allowing Ohio to join a multistate lottery like Powerball or the Big Game, which would raise about $41 million over two years.

        The multistate lottery is backed by fellow Republican Gov. Bob Taft but opposed by House Republicans.

        The leased vehicle plan would provide Ohio $88.5 million next year, Sen. Jay Hottinger of Newark, a finance committee member, said Thursday.

        Senate Republicans say the change in taxing would collect extra money faster without imposing a new tax.

        “It doesn't cost the consumer any more, it doesn't cost the dealers any more, it doesn't cost anybody any more,” said Sen. Bill Harris of Ashland, finance committee co-chairman and a car dealer.

        “It just gets the state that money in this economic downturn faster and over a period of time it balances itself out,” he said.

        Mr. Taft announced three weeks ago that the slowing economy and the financial impact of the Sept. 11 terrorist attacks will lead to the $1.5 billion deficit by the end of 2003.

        He ordered $600 million in budget cuts and proposed targeted tax increases, tapping the rainy day fund and borrowing money from Ohio's $10.1 billion settlement with major tobacco companies.

        Daniel Navin, director of tax policy for the Ohio Chamber of Commerce, said fewer Ohioans would lease cars if the tax proposal is adopted.

        “Part of the motivation for a lease is that a lot of people don't have the upfront cash that would be necessary to finance the actual purchase of the item,” he said.

        Sen. Doug White of Manchester, a finance committee member and the No. 2 Senate Republican, has qualms about the idea. However, he said it would likely pass the committee and go to the full Senate.

        Mr. Harris and Mr. Hottinger both said there is little support for a proposal to tax income in trusts that has not been paid out to a beneficiary.


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