Those who frequent bowling alleys, sporting events or hair salons might soon find themselves paying sales tax for these services.
Gov. John Kasich’s new two-year, $63.3 billion budget aims to expand the state sales tax to include services that were previously exempt.
Kasich has proposed reducing the sales tax rate and expanding it to include many services. If approved, the plan will reduce the state sales tax from 5.5 percent to 5 percent.
The loss from the 0.5 percent decrease in sales taxes would be made up by expanding the sales tax to encompass services along with the goods that are already taxed.
The department of taxation reported that overall 81 new services would be affected by the expansion of the sales tax. Others include using the services of a lawyer or an accountant.
However, there will still be services that would remain exempt from the new tax policy some of which include, health care education, insurance premiums and trash removal.
“I don’t know that it’s going to affect the business we do that much,” said Russ Mercer, manager of Pastime Lanes in Marietta. “I think that this will have a larger impact on big businesses than small local businesses.”
He said he is more worried about the effect that a sales tax could have on his customers.
“It doesn’t matter if you are at fault or not because the sales tax will reflect on your business regardless,” he said. “My main priority is and will always be keeping the customers happy.”
Local attorney Dennis Sipe, of Buell and Sipe Co., said he isn’t worried about a possible sales tax hurting his business.
“People come to professionals for services they need,” he said. “Regardless of if there is a sales tax or not they will continue to require these services.”
This type of a sales tax proposal isn’t a surprise for Sipe based on the way the country is structured now.
“Our society is becoming more service based rather than manufacturing based,” said Sipe. “The government is simply looking for ways to maintain revenue from the sales tax because we don’t make as many products.”
Some local residents see the plan as simply a way to make some extra spending money for the state.
“It’s a way for the state to increase revenue without seeming to increase the taxes,” said Glen Sarver, of Marietta. “I’m sure it will affect businesses but I’m not sure it will cause any permanent harm.”
Sherry Arnold, 55 of Marietta, said this type of proposal could really hurt her financially.
“I’m a nurse currently on disability and on an extremely low income,” she said. “I feel like I’m already taxed for everything and my total income for the month is only $793.”
For consumers on fixed incomes the thought of a sales tax on a wide range of services is no small thing.
“I’m pinching pennies to cover my expenses as it is,” Arnold said. “I think a proposal like this would damage a lot of local businesses as well.”
Bob Ferguson, of Rea and Associates accounting firm in Marietta, said he’s not sure yet if the move will be positive or not.
“Right now the Ohio Society of CPAs hasn’t said that they are going to support or oppose it,” he said. “It’s hard to tell right now if this is going to be good or bad for the state of Ohio because it’s so new.”
As with most additional costs to a business the cost eventually gets passed on to the consumer, according to Ferguson.
That increase in cost to the consumer could ultimately impact businesses located on state borders more than those in the central portion of the state.
“If another state doesn’t have this sales tax on similar services then it could negatively affect Ohio businesses,” said Ferguson. “If something is $100 plus the sales tax for a service in Ohio and $100 with no tax in another state, Ohio businesses are at a disadvantage.”
For some area residents the idea of driving across state lines to save a little on taxes isn’t very feasible.
“I’d rather save myself the 25 minute drive and stay in Marietta,” said Steven Self, of Marietta. “If you really think about it you would likely spend more on gas than you would save on the sales tax.”
Self said he isn’t concerned with the expansion of the sales tax to service industries.
“I think it would be a good thing to broaden the scope of sales tax,” said Self. “Not only will it bring more money in, but it comes from a wider range of people.”