Ohio Gov. John Kasich’s recent proposal to reform certain tax laws in Ohio has been introduced to the Ohio General Assembly via House Bill 59. This is now more than a speech. Still, it leaves some questions unanswered.
Expanded Sales Tax Categories
As we indicated previously, the Governor would like to expand sales tax to include all services except the following “necessities of life” services:
- Medical and health care services
- Educational services and tutoring services
- Real property construction services
- The lease or rental of a house, apartment, condominium, mobile home, or similar dwelling to a person, provided that the person occupies the dwelling for 30 or more consecutive days and that the dwelling is the person’s primary residence
- Transactions by which a consumer obtains insurance
- Adult and child day care services
- Social assistance services
- Services used directly in producing tangible personal property by mining
- Residential trash pick-up and disposal (“residential” means property improved with single-family, two-family, or three-family dwellings)
- Services rendered for an employer by the employer’s employees within the employment relationship
- Funeral services
The following terms are specifically defined in the House Bill:
“Medical and health care services” means services provided to an individual by a professionally trained and licensed medical practitioner or other provider who plays an active role in the diagnosis, treatment, or care of patients. It includes services provided in a hospital, clinic, doctor or dentist office, laboratory, or any other location where patient care is provided, as well as the provision of drugs by a pharmacist, patient care by nursing home staff, and in-home care or companionship by a provider engaged to sustain the health and well-being of individuals with diminished physical or mental capacity.
“Social assistance services” means welfare activities organized by a private individual or entity for the purpose of improving the well-being or quality of life of an individual, group, or community. As used in this division, “welfare activities” includes, but is not limited to, teaching, adoption services, foster care placement services, services that improve the quality of life of elderly or disabled persons, clinical psychological and psychiatric counseling services, substance abuse counseling, vocational rehabilitation services, crisis intervention services, the collection, distribution, and delivery of free or reduced-cost goods such as food or clothing to the needy or to victims of natural disasters, and similar services.
“Adult and child day-care services” means services that involve attending to the needs of children or adults who require assistance with daily life activities, including services provided by an individual related to the child or adult by blood, marriage, or adoption.
“Educational services” means the services enumerated in sector 61 of the North American Industry Classification System (NAICS) manual published by the U.S.Office of Management and Budget.
Other terms have yet to be defined. Perhaps these will follow established case law, will be set forth in subsequent versions of this legislation, or will be left to administrative rule-making.
This Bill will undergo extensive hearings in the House; if the bill moves forward, it will likely entail hearings in the Ohio Senate, as well. Certainly, trade associations and individual constituents will be weighing in on this and the other tax measures addressed in this bill.