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Tax collection proposal by state could have merit

February 14, 2012
Morning Journal News

At least two Columbiana County municipalities have taken a stand against a state proposal to centralize the collection of local income taxes.

Both Lisbon and East Liverpool have pretty much told the state to keep its hands out of local tax coffers. East Liverpool council passed a resolution against the plan, as requested by the Ohio Municipal League, while Lisbon council voted to write a letter to the governor opposing the plan.

Among the benefits noted to such a plan is that many communities already use the Regional Income Tax Authority (RITA) to collect their taxes; it would be less expensive than cities having their own tax departments; simplifying income tax forms would help businesses that conduct operations in a number of cities; and most other states have already taken this step.

Potential problems with such a plan include not knowing what charges the state would assess, unknown response time from collection to receipt by the municipality, problems with cities and townships sharing the same zip code, as with East Liverpool, St. Clair and Liverpool townships, and whether the tax distribution would be like Local Government Fund revenue, with the state keeping the lion's share of collections.

Officials in both communities are concerned they would end up losing money if the state takes over tax-collection duties and deducts an excessive administrative fee.

According to the Columbus Dispatch, Gov. John Kasich proposed having the state take over tax collection duties as a way to save money through improved efficiency. The move is supported by the chairman of the Ohio Society of CPAs board, who said the "centralized collection for Ohio municipal income tax is a common-sense change that would save most governments, businesses and individuals both time and money."

Perhaps local towns should study the proposal further before making a decision. If the state is able to administer the tax collections and distribution cheaper than municipalities can do it themselves, and at the same time provide guarantees that municipalities won't lose tax money with the plan, it might warrant consideration.



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