CINCINNATI - Ohio Gov. John Kasich's tax reform package as part of his proposed 2013 budget incorporates a significant rewrite of Ohio's tax code that he says reflects the state's shift from a manufacturing to service economy.
The rewrite reduces the tax rate on virtually all small businesses by 50 percent, cuts the income tax rate statewide by 20 percent over three years, and lowers the sales tax rate from 5.5 percent to 5 percent while imposing the tax on more services.
The Department of Taxation said almost 80 new services would be taxed as part of Kasich's 2013 budget proposal.
Just what are the services Kasich is proposing to tax?
The revisions will impose sales taxes on professional services -- including lawyers, lobbyists and accountants. The full list of services are at the bottom of this article.
One service that is proposed to be taxed under the new budget is cutting, coloring and styling of hair.
Monica Clark, the manager of Pure Concepts Salon in Kenwood, says she's worried about business.
Clark said if they are taxed, prices may have to go up and they won't be able to be competitive. She also said she is worried stylists may not make as big of tips with the rate increases.
Karen Vogesberger, a stylist with Pure Concepts, said she is worried that if taxes go up, people will choose to get their hair styled and cut less, and her income might go down.
"It's just going to raise the prices and make clients upset that they're going to be paying more money," Vogesberger told 9 On Your Side reporter Tom McKee.
Other business owners say they are battling a perfect financial storm of the economy recovering from the recession, a smoking ban and competition from gambling and can’t afford another financial hit.
"Now, to add a tax on top of this, while out of state companies come in to sell gaming in this state, simply isn't fair," said Frank Ruggerie, the owner of Colerain Bowl.
Ruggerie told McKee he supports what Ohio Gov. Kasich is trying to do with business but thinks the tax could cripple his operation.
The administration hopes to ease some of the opposition to the budget by reducing the overall sales-tax rate despite it being expanded to other areas. Kasich said the time has come to rewrite the code to include those services.
States that have tried something similar, including Michigan and Florida, have quickly had to backpedal amid concerns implementation was unworkable.
"Gov. Kasich's tax proposals are welcome, because they address Ohio's biggest long-term problem: sluggish growth in job opportunities and incomes," Ohio University economics professor Richard Vedder said in a statement released by the administration.
For more information on Kasich's budget, go to http://jobsbudget.ohio.gov/.
Full list of services to be taxed under Gov. Kasich's new budget proposal (according to the Department of Taxation):
Admission and Amusements:
Schools and college sports
Amusement park admission and rides
Circuses and fairs
Coin-operated video games
Pinball and other mechanical amusements
Rental of films and tapes by theaters
Horse boarding and training
Parking lots and garages
Accounting and bookkeeping
Advertising agency fees
Architectural, engineering and related services
Bail bond fees
Check and debt collection
Commercial art and design
Credit information, credit bureaus
Interior design and decorating
Lobbying and consulting
Process server fees
Sales of advertising time or space on/in billboards, magazines, newspapers, radio and TV
Public relations, management consulting
Secretarial and court reporting
Test laboratories (Excluding medical)
Software, custom programming
Software, modifications of pre-written programs
Computer Online Downloading:
Other electronic goods
Finance, Insurance, Real Estate:
Loan broker fees
Property Sales agents
Real estate management fees
Real estate title abstracts
Banking services charges
Leases and Rentals:
Overnight trailer parks
Cutting, coloring, styling of hair
Fishing and hunting guide
Tax return preparation
Packing and crating
9 On Your Side reporter Tom McKee contributed to this report.
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