GOP budget raises Ohio sales tax, goes after Internet purchases

There's a lot to like in the Republican budget for the state of Ohio - but there are some disturbing items as well: a sales tax hike and Internet taxes.

The first thing you should know is that Ohio's income went up last year. The Dayton Daily News reported in April:

The Buckeye State experienced big increases in sales taxes, personal income taxes, hospital-related taxes and corporation licenses in fiscal year 2012, the Dayton Daily News found.

Ohio’s tax receipts grew by $905.9 million in fiscal year 2012, which ended last June 30, compared to the previous fiscal year, according to an analysis of 2012 Census of Governments data released Thursday.

A new income source came from one-time licensing fees of $50 million paid by two of Ohio’s new casinos.

The state got $100 million in fees from the opening of casinos in Cleveland and Toledo in May 2012. While that’s a one-time occurrence for each casino, the state will add another $100 million in the current fiscal year for the casino in Columbus, which opened Oct. 8, 2012, and one in Cincinnati, which opened in February.

Ohio tax receipts increased by 3.6 percent in the last fiscal year.

The GOP budget fact sheet, provided by Gongwer Ohio, is titled: "Putting More Money Back in Ohioans' Pockets" and says:

"The House & Senate Majority Caucuses have said from day one that we need to shift towards a consumption-based tax structure and away from our current income tax structure, which penalizes success. Additionally, we have said from day one that you want to ensure that we are not playing a "shell game" where $1 of taxes are cut, but raised by $1 elsewhere."

They are proposing a 50% small business tax cut on the first $250,000 in net business income and a 10% income tax cut, which is a on the personal income tax rate over the next three years.

But there are tax increases in the plan:

* In the future, the Homestead Tax Exemption will be means tested and only apply to seniors earning less than $30,000. It applies to all seniors now. They will grandfather in anyone currently getting the exemption.

* The state has been subsidizing property taxes from local levies - at a rate of 12.5%. That will end for any new levies. The rationale is that with a lower income tax rate, property owners won't need the state subsidy.

* Gambling losses will no longer be deductible. You'll pay taxes on gambling gains, but won't be able to deduct losses.

* All cigarettes will be taxed at the same rate, which will be a bit lower than what is paid on regular cigarettes.

* If you purchase a magazine at the newsstand or grocery store, you pay sales tax on it. This tax will now be applied to magazines purchased through a subscription.

But the big one is the sales tax, which is increased from 5.5% to 5.75%.

Additionally, in a move they describe as "streamlining" and part of "modernizing our overall tax structure," Ohio will become a full member of a multi-state compact in order to expand the collection of sales taxes due from catalog and Internet purchases.

Another bullet item says they will be "equalizing sale of digital goods with their already taxed hard copy counterparts."

Since the actual language is not yet written, this could mean a number of things but the general consensus is that they are going to require the sales tax on Internet purchases.

All these plans to raise taxes are supposed to be offset by the decrease in income tax. But that assumes that the additional sales you end up paying is actually less than the cut in the income taxes. That may be true for some, but not for others. The good news for purchasers is that you don't *have* to continue purchasing things like magazines and clothes and cigarettes, etc... so you can see an overall reduction in the taxes paid.

I guess I'm just not convinced this will give Ohioans "more buying power and help create jobs."