Wednesday, April 2, 2003

House GOP offers $100M in new taxes

Plan would require deep cuts in spending

By Spencer Hunt
Enquirer Columbus Bureau

COLUMBUS - Faced with Gov. Bob Taft's demands for more than $3 billion in new taxes over the next two years, House Republicans countered with an offer to raise $100 million.

The House GOP plan, unveiled Tuesday, would extensively rewrite state tax laws for businesses and families. But the changes are not intended to increase the total amount of taxes the state collects.

The $100 million in new revenues would come from expanding the sales tax to services including dry cleaning, taxi and limo rides, towings, manicures, massages - even magazine subscriptions.

"It's a broadening of the sales tax," said House Speaker Larry Householder, R-Glenford. "But not nearly to the extent that the governor would have broadened it."

Taft wanted the sales tax to cover a much longer list of exempt services, including cable TV, real estate commissions, used-car trade-ins and parking fees. Lawmakers also ignored Taft's pleas for higher cigarette and alcohol taxes and a $777 million increase in business taxes.

Householder said deeper cuts to state programs would fill the money gap between his plan and the governor's. He cautioned that things could change quickly.

"There's been no decisions made yet," he said. "I feel pretty good about probably 85 to 90 percent of this and the rest of it is open to options."

Other lawmakers said millions more in taxes may be needed if lawmakers can't remove up to $3 billion in proposed spending from Taft's budget.

"It all depends on what we can cut," said. Rep. Tom Niehaus, R-New Richmond.

The governor's office offered only a few words in response.

"We've not read through this entire bill yet," said Taft spokesman Orest Holubec. "The governor thinks his proposal is a responsible and balanced proposal."

Among the most dramatic tax changes proposed Tuesday is a plan to replace the state's nine income tax brackets with two.

Families earning up to $20,000 a year in taxable income would be exempt from the income tax.

Those earning between $20,000 to $50,000 a year would pay a 2.25 percent tax rate on their income. Those earning more than $50,000 would pay a 4.64 percent rate. The plan would also eliminate most credits and exemptions.

Rep. Sally Conway Kilbane, R-Rocky River, chairwoman of the House Ways and Means Committee, said families earning between $25,000 to $90,000 a year would pay "a little less" in taxes on average while those above $90,000 would pay "a little more."

She also acknowledged that those families that earn $200,000 or more a year would see their taxes drop, because they will no longer be paying a 7.5 percent rate.

The House plan would eliminate taxes corporations pay on their tangible property and net worth. The $2.3 billion in lost revenues would be replaced by a new tax based on corporations' sales, property and payroll.

Kilbane and other Republican lawmakers said the sales taxes on services are supposed to be the only source of new revenues.

A list of proposed cuts could emerge Thursday as lawmakers march toward Householder's informal April 9 deadline to send a budget plan to the Senate.

Budget-cutting ideas include a controversial plan that would seriously reduce or eliminate more than $1 billion in state funds sent to cities, counties, villages, townships and libraries. Local governments would have to ask voters to replace the missing revenues.


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