VANDALIA — The Vandalia City Council recently passed a resolution which strongly opposes a state proposal to centralize the collection of business net profit tax returns.
That proposal was tucked into Governor John Kasich’s budget proposal for fiscal years 2018-19. The proposal would charge municipalities a one percent fee for collecting the tax and is widely seen as a step toward an eventual state takeover of all municipal income tax collection – something local officials are adamantly opposed to.
“Governor Kasich’s proposal would confiscate income tax revenue approved by Vandalia City Council and the residents of Vandalia, convert it to a ‘state’ tax, then return a portion to the City three or four months later,” explained Jon Crusey, Vandalia City Manager.
Crusey argues that bigger is not always better and that local tax collection is better handled on the local level.
“Businesses already have the option to file through the Ohio Business Gateway, but more than 90 percent choose not to,” Crusey said. “I believe it’s safe to say that those familiar with the portal’s operation agree that it struggles to handle the small amount of use it currently receives,” Crusey said. “So, the Governor’s proposal is to mandate that businesses file through the OBG even though the overwhelming majority currently choose not to.
“The State calls this being business friendly,” Crusey said. “But we believe that the vast majority of businesses would rather deal with their local income tax office where they receive far superior customer service to what can be expected from the Ohio Department of Taxation.”
“The only way the Governor’s proposal makes sense is if there are ulterior motives,” he said. “I believe the next move for the State will be to take over 100 percent of City income tax collections across Ohio. The new system would deliver one more blow to Home Rule, local control, and Vandalia residents having a voice in how their community is funded and operated.”
Vandalia Mayor Arlene Setzer agrees.
“Centralized collection is a very bad idea for a number of reasons,” insists Vandalia Mayor Arlene Setzer. “It is a system that cannot be adequately managed at the State level, and could cost Vandalia tens of thousands of dollars in lost revenue.”
Setzer, who served as Ohio House District 36 Representative from 2000 to 2008, said a primary reason for her opposition is that the State of Ohio simply does not have the resources necessary to effectively and efficiently manage municipal collections.
“Vandalia’s tax department currently processes every single tax return submitted,” she said. “This is the only way to assure that everyone pays their fair share. The State Tax Department would not and could not devote the resources necessary to pursue every return.”
Setzer noted that under the new system, Vandalia would lose the ability to monitor accounts to assure that the full tax liability has been met,” she said. “Further, we could not provide the filing assistance many taxpayers rely on to complete their taxes as quickly and efficiently as possible.”
The State’s proposal calls for monies collected to be distributed back to municipalities in quarterly payments.
“Without question, this will interrupt and impede many Ohio cities’ and villages’ abilities to meet typical financial obligations,” she said.
The Mayor noted that City Council as a whole is also very much opposed to the continual eroding of Home Rule powers guaranteed in the State Constitution. “This loss of control is particularly alarming to us because it precludes local officials from serving as good stewards of our taxpayers’ dollars,” she said.
“If the State were to experience another economic recession, policy changes to protect Ohio’s financial solvency could impact the distribution of municipal income tax dollars administered by the State.”
Vandalia City Council’s Resolution calls for the Ohio General Assembly to request the immediate removal of all language pertaining to centralized municipal income tax collection and administration.
Setzer encourages all interested citizens and business owners to contact their State elected officials to voice their concerns.
“Legislators need to know that it’s not just municipalities opposing this measure,” she said. “They need to hear from the disenfranchised citizens who will see less of their local tax dollars going to provide the services they depend on.”
Vandalia’s State legislators include:
State Representative Mike Henne
State Senator Peggy Lehner
Governor John Kasich
Reach Darrell Wacker at 937-684-8983 or on Twitter @VandaliaDrummer.