New services to be taxed under Gov. Kasich's proposed budget plan
PJ O'Keefe, WCPO Digital
12:47 PM, Feb 8, 2013
12:18 AM, Feb 9, 2013
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.
Full list of services to be taxed under Gov. Kasich's new budget proposal (according to the Department of Taxation):
Admission and Amusements: Cultural events Professional sports Schools and college sports Amusement park admission and rides Billboard parlors Bowling alleys Cable TV Circuses and fairs Coin-operated video games Pari-mutuel racing Pinball and other mechanical amusements Rental of films and tapes by theaters
Agricultural: Horse boarding and training Pet grooming
Automotive: Parking lots and garages
Business: Accounting and bookkeeping Advertising agency fees Architectural, engineering and related services Bail bond fees Call centers Check and debt collection Commercial art and design Credit information, credit bureaus Interior design and decorating Legal Lobbying and consulting Magazine subscriptions Mailroom Management consulting Marketing 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 Telemarketing Telephone answering Test laboratories (Excluding medical) Travel agent
Computer: Software, custom programming Software, modifications of pre-written programs
Computer Online Downloading: Books Movies/digital video Other electronic goods
Finance, Insurance, Real Estate: Insurance Investment counseling Loan broker fees Property Sales agents Real estate management fees Real estate title abstracts Banking services charges Financial reporting Insurance transactions
Leases and Rentals: Overnight trailer parks
Personal Services: Accounting Cutting, coloring, styling of hair Dating Debt counseling Fishing and hunting guide Funeral Legal Mailbox rentals Tax return preparation Travel agent
Professional: Architects Credit rating Data mining Engineers Land surveying Public relations Sound recording Stenographic services
Transporation: Intrastate courier
Storage: Marine towing Packing and crating
Utility: Refuse collection
9 On Your Side reporter Tom McKee contributed to this report.