Monday, July 14, 2003

Convergys first to use new extended tax break law

By Ken Alltucker
The Cincinnati Enquirer

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Convergys first to use new extended tax break law
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Convergys Corp. is the first in Ohio to take advantage of a new state law aimed at giving companies longer-lasting tax breaks in return for keeping or creating jobs.

House Bill 1, sponsored by Rep. Thomas Patton, R-Strongsville, extended the length of the tax credits for keeping existing jobs or creating new ones from 10 to 15 years.

Essentially, the move saves companies money for more time.

The Taft administration, wary of a possible Convergys relocation to Northern Kentucky, suggested the change.

"I guess you can say we were given direction on that particular part of the legislation from the Department of Development," said Patton, a suburban Cleveland lawmaker. "If they need to frame that, is that a bad thing? I don't think it is."

The new law also gives companies another concession. It gives the state more discretion when deciding whether to yank a tax break.

Before, companies were ineligible to cash in tax credits if they failed to fulfill at least 90 percent of the jobs they promised to keep or create.

The new law allows the Ohio Tax Credit Authority to decide when tax breaks should or shouldn't be offered.

It's an acknowledgement of the fact that Ohio's economy has been struggling. Some companies have had to scale back their expansion plans.

"We think substantial compliance, given a bad economy, ought to be good enough," said Bruce Johnson, Ohio's development director.

Further underscoring how strongly Ohio has been fighting to keep Convergys from relocating was a specific tax loophole proposed by the governor. It never went into effect, but it would have exempted Convergys from a proposed tax on inter-company transactions.

Gov. Bob Taft pushed for the transaction tax earlier this year as part of a basket of new taxes on everything from dry cleaning to real estate commissions.

His administration also lobbied lawmakers to exempt Convergys from the tax.

The loophole became irrelevant, however, when the General Assembly killed the proposed transactions tax.



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