You will pay more when you purchase items on which you pay sales tax, and property tax levies and renewals will be more expensive.
But your state income tax bill will go down.
That’s because of provisions built into the two-year state budget signed by John Kasich, Ohio governor, Sunday, June 30.
The sales tax hike increases the state’s 5.5% share of the sales tax to 5.75%.
Fulton County charges a 1.5% “piggyback” sales tax, so that means sales taxes on purchases in Fulton County increase to 7.25%.
Randy Gardner, state senator (R-Bowling Green) representing Archbold, said the one-quarter of one percent (.25%) increase is part of the overall package that will allow state government to cut $2.7 billion from income tax bills.
It will amount to a 10% across-the-board tax cut, phased in over three years.
Gardner explained the plan switches tax from income to consumption. Persons who consume more, pay more.
“The net result is lower taxes,” Gardner said.
There are those who say increasing sales taxes while lowering income taxes places more of the burden of paying for government on lower-income people.
Not true, Gardner said.
“The lowest wage earners will receive a net tax reduction with this plan,” he said.
“If you spend $20,000 a year on taxable goods, and that’s a fairly high figure, your sales tax increase is $50.”
Barbara Sears, state representative (R-Monclova Township), who represents Archbold in the Ohio House of Representatives, said a person earning about $30,000 per year currently pays $526 per year in state income taxes.
When the income tax reduction is in full effect, that person’s tax bill will be reduced to $467, a savings of $59, or about 11%.
But that same person will probably only see his sales tax bill go up $38. The next result is a $21 savings.
She said as income levels increase, the income tax savings increase.
Sears fundamentally disagrees with the argument that higher sales taxes impose an increased burden on persons with lower incomes.
“It depends on your spending habits,” she said.
People who spend more, pay more tax, she said.
Property Tax Changes
Under previous budgets, the state of Ohio paid a 12.5% share of property tax bills for owner-occupied structures.
Annie Hernandez, fiscal supervisor in the office of Brett Kolb, Fulton County auditor, said under the old law, if a person owned propby they received a 10% reduction in their property tax, with the state paying that 10% share to the county.
If a person owns and lives in the same property, they received an additional 2.5% cut in the property tax, again with the state reimbursing the county for the discount.
That scheme had been in place for many years, Hernandez said.
Under the new budget, when a new property tax levy is approved, or an old levy is replaced, the 10% and 2.5% reductions are eliminated.
Also, since 2007, all persons over the age of 65 and/ or permanently, totally disabled adults could have the property tax they pay on their home reduced under a program called Homestead Exemptions.
Prior to that, seniors and disabled adults went through “means testing.” If they received more than a certain amount of income, they did not qualify for the reduction.
With the new Ohio budget, means testing is put back in place.
Aaron Rex, Archbold Area School District superintendent, and Chris Lee, Pettisville Local School District treasurer, said the elimination of the property tax cuts will make it harder for school districts to pass property tax levies.
“I don’t think it’s a good thing for schools,” Rex said.
“They’re not making it easy,” Lee said.
Sears said by eliminating the reductions, the property tax systems become more transparent and easier to understand.
Gardner and Sears said there were some things in the state budget bill they didn’t agree with.
Gardner said, “My preference, if I were able to write tax reform, would have been to not include the sales tax increase. My preference would be to the reduce tax burden.
“But individual legislators don’t have the authority” to write tax policy, he said.
Sears said there were things in the budget she was disappointed about, but overall, “it a good budget,” she said.