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By Stephen Majors
Associated Press
POSTED: 03:56 p.m. EDT, Jun 23, 2009
COLUMBUS: Ohio's budget plan would give a tax break to the oil industry at a time when state revenue has plummeted, causing lawmakers to consider a gambling expansion and making major cuts to a range of programs.
The tax break, pushed by the Republican-controlled Senate, would exempt fuel distributors from paying Ohio's business tax when they swap gasoline to ship it more efficiently. The Ohio Department of Taxation said Tuesday that the exemption would result in about $20 million less in state revenue each year.
"The Department of Taxation has been concerned about any attempt to narrow the base of the tax through loopholes or carve outs or exemptions," said spokesman John Kohlstrand. "There is a slippery slope concern."
The oil industry said the swaps are exempted from the Commercial Activities Tax because no money changes hands, and they enable one of the most crucial public goods to be shipped at the lowest cost possible. In the swap, a gasoline distributor with a terminal in one location, say Columbus, swaps gasoline with a distributor with a terminal in Indianapolis, if both have retail customers that can be more efficiently served from the other location.
The push for the tax break comes at a time when lawmakers are scrambling to plug a $3.2 billion budget deficit before July. The state's tax revenue, including from the business tax, has been drastically falling short of expectations because of the recession.
Gov. Ted Strickland announced his support Friday for a plan to put slot machines at Ohio's seven horse racing tracks — which he said would raise about $933 million over two years. He also proposed $2.4 billion in cuts, including to programs such as early childhood education and behavioral health services.
Business interests have begun to take aim at the Commercial Activities Tax, which was heralded by lawmakers as a fair, broad-based replacement to another tax that was riddled with loopholes and exemptions. The tax is levied on gross receipts, including on the fair-market value of any services or property received — which would include swaps, according to the Ohio Department of Taxation.
Ohio grocers have sued the state, saying the tax can't be applied to the sale of food taken home, while the Ohio Petroleum Council said it also plans to take the state to court if the exemption on swaps does not remain in the budget plan.
"Creating loopholes for special interests would undermine the goals of the tax reforms," said Strickland spokeswoman Amanda Wurst, who wouldn't say specifically whether the governor would veto the proposed exemption for the oil industry.
But the oil industry, which was exempt from the Commercial Activities Tax during the first two years it existed, took issue with the department's estimate for the amount of revenue that would be lost. It also said that if the tax issue doesn't make the budget, and a court challenge fails, the industry will stop using swaps — and gasoline transportation will become more expensive.
"You tell me one other commodity that is as necessary as gas is," said Terry Fleming, executive director of the Ohio Petroleum Council. "Sometimes you've got to use common sense and they're not using common sense here.
"Other than tobacco, we are the most heavily taxed industry in the state of Ohio," Fleming added. "It's not like we're avoiding anything."
COLUMBUS: Ohio's budget plan would give a tax break to the oil industry at a time when state revenue has plummeted, causing lawmakers to consider a gambling expansion and making major cuts to a range of programs.
The tax break, pushed by the Republican-controlled Senate, would exempt fuel distributors from paying Ohio's business tax when they swap gasoline to ship it more efficiently. The Ohio Department of Taxation said Tuesday that the exemption would result in about $20 million less in state revenue each year.
"The Department of Taxation has been concerned about any attempt to narrow the base of the tax through loopholes or carve outs or exemptions," said spokesman John Kohlstrand. "There is a slippery slope concern."
The oil industry said the swaps are exempted from the Commercial Activities Tax because no money changes hands, and they enable one of the most crucial public goods to be shipped at the lowest cost possible. In the swap, a gasoline distributor with a terminal in one location, say Columbus, swaps gasoline with a distributor with a terminal in Indianapolis, if both have retail customers that can be more efficiently served from the other location.
The push for the tax break comes at a time when lawmakers are scrambling to plug a $3.2 billion budget deficit before July. The state's tax revenue, including from the business tax, has been drastically falling short of expectations because of the recession.
Gov. Ted Strickland announced his support Friday for a plan to put slot machines at Ohio's seven horse racing tracks — which he said would raise about $933 million over two years. He also proposed $2.4 billion in cuts, including to programs such as early childhood education and behavioral health services.
Business interests have begun to take aim at the Commercial Activities Tax, which was heralded by lawmakers as a fair, broad-based replacement to another tax that was riddled with loopholes and exemptions. The tax is levied on gross receipts, including on the fair-market value of any services or property received — which would include swaps, according to the Ohio Department of Taxation.
Ohio grocers have sued the state, saying the tax can't be applied to the sale of food taken home, while the Ohio Petroleum Council said it also plans to take the state to court if the exemption on swaps does not remain in the budget plan.
"Creating loopholes for special interests would undermine the goals of the tax reforms," said Strickland spokeswoman Amanda Wurst, who wouldn't say specifically whether the governor would veto the proposed exemption for the oil industry.
But the oil industry, which was exempt from the Commercial Activities Tax during the first two years it existed, took issue with the department's estimate for the amount of revenue that would be lost. It also said that if the tax issue doesn't make the budget, and a court challenge fails, the industry will stop using swaps — and gasoline transportation will become more expensive.
"You tell me one other commodity that is as necessary as gas is," said Terry Fleming, executive director of the Ohio Petroleum Council. "Sometimes you've got to use common sense and they're not using common sense here.
"Other than tobacco, we are the most heavily taxed industry in the state of Ohio," Fleming added. "It's not like we're avoiding anything."
Comments
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Posted 06:37 PM, 06/23/2009
Back in the 70's, when my old man got out of the service, he kept trying to tell my mom we needed to move to San Diego where he was stationed. But that idiot had to stay here for family and now I'm stuck in the La Brea tar pit that is Ohio. Bunch of hillbillies who now officially have no hope and now my fate is tied to all of you. I should've just joined the service and got out when I had the chance. X-(
Posted 06:49 PM, 06/23/2009
I wonder when I am getting a tax break. Not the kind that I am going to have to pay back the next year but the one that relieves a little bit of the burden before the taxes drive me to bankruptcy.
