Statehouse Connection The Voice of the Profession: Fighting any sales tax on legal services TODD BOOK Todd Book is the OSBA Director of Policy and Government Affairs.
he 132nd session of the Ohio General Assembly is well under way. Governor John Kasich’s budget bill (House Bill 49) was introduced in early February. Coming in at 3,500+ pages, the bill continues its perilous voyage through the turbulent legislative seas. First stop—the Ohio House of Representatives, where legislators have been hard at work, systematically reviewing all provisions of the bill and determining what they can and cannot support. As expected, in his continued efforts to reduce the state income tax, the governor is once again looking to consumption taxes to foot the bill. He proposed to expand the state sales tax to cover more services not previously taxed, and called for an increase in the sales tax rate from 5.75% to 6.25%. The good news is our state elected officials clearly have heard the OSBA’s concerns over the years, as legal services were not expressly targeted in the bill. However, lobbying services and
OHIO LAWYER MAY/JUNE 2017
repossession services were included, and though these areas would not, to all outward appearances, include legal services, the definitions in the bill could be extended to certain aspects of what we do—for example, legal representation that includes advocating before the legislature, as well as foreclosures/ collection work. Rest assured, the OSBA government affairs team has been at the Statehouse raising these very issues with key legislators. I am grateful to OSBA Taxation Committee Chair Rich Fry of Buckingham Doolittle & Burroughs LLC in Akron, who testified before the House Ways & Means Committee on behalf of the OSBA and did an outstanding job representing our position. Knowing there is strength in numbers, the OSBA has once again partnered with the Ohio Service Industry Coalition—a diverse group of 25 businesses, trade associations and professional organizations in opposition to the sales tax increase and expansion. We collectively represent approximately one million employees, 60,000 establishments and a total compensation of nearly $40 billion, which makes us a formative voice in the debate. Our message to all who will listen is that higher sales tax rates and new taxes on targeted services will slow sales, hurt the state’s competitiveness, and raise costs for individual and business consumers. This strategy is working. I am pleased to report that when the House rolled out its substitute version of the bill in late April, they stripped out the vast majority of the tax expansion language and the proposed sales tax increase. This is good news, but we still have some more work
to do and a long way to go before the bill is signed into law. Following House passage, the Ohio Senate will get a chance to make its mark on the budget bill and then there will be a conference committee to iron out the differences. Remember, the budget must be balanced, passed and signed by the Governor before July 1. The Senate Finance Committee has already started holding informal hearings on the bill to meet the tight timeframe. They will have their work cut out for them as state revenue numbers are coming in lower than expected, which means they will have fewer resources to work with. Even with this added challenge, I remain cautiously optimistic that things are going to break our way, but please stay tuned because when it comes to the state budget, anything can (and will) happen. Thanks to the continued support of our membership and the hard work of our leadership and staff, the OSBA remains a trusted voice at the Statehouse. This credibility, coupled with hard work and organization, have contributed to our success in stopping any expansion of the sales tax to legal services over the years. We will rely on that strength in the months ahead as legislators work to bring the final budget bill into port. Please stay in touch. If you have questions about the HB 49 or any other issues pending before the General Assembly, please contact me at tbook@ ohiobar.org.