On June 30, Ohio Governor John Kasich (R) gave his signature to HB 59, the FY 2014-15 budget. He approved much but vetoed 22 items, including a controversial item entitled “Sales Tax Collection on Internet Sales with Nexus to Ohio.”
Internet Sales Tax Rejected
His veto reads:
“This item attempts to mandatorily apply the collection of Ohio sales and use tax to transactions between out-of-state internet retailers and Ohio residents. Similar items enacted in other states have resulted in extensive litigation without necessarily producing an increase in state revenue. The federal government retains the right to regulate interstate commerce. Without the collection authority being clearly extended to the states for the purpose of out-of-state interstate retailers, the legality of this item is uncertain and problematic. Congress must act before this policy change may become viable. Therefore, this veto is in the public interest.”
Governor Kasich references the federal government’s right to regulate interstate commerce. Federal lawmakers are currently considering the Marketplace Fairness Act of 2013, which would give states the right to impose a sales tax obligation on certain remote vendors, provided the states enact sales tax simplification measures. Ohio is an associate member of Streamlined Sales Tax, which was created to “simplify and modernize sales and use tax administration….”
Sales Tax Increase Approved
While the governor axed the so-called Amazon tax, he approved a sales tax rate increase. Effective September 1, 2013, the Ohio sales tax rate will increase by a quarter of a percent, from 5.5% to 5.75%.
The budget also imposes sales and use tax on “purchases of computer data center equipment used or to be used in an eligible computer data center and to pay any sales and use taxes due on purchases of tangible personal property or taxable services other than computer data center equipment used or to be used in an eligible computer data center….” (Section 8I).
Read the complete Ohio FY 2014-15 budget here.