UNION — Following in the footsteps of most area cities, the City of Union Council adopted an ordinance under emergency status Monday to amend its income tax code to adopt sections of the Ohio Revised Code.
All municipalities in Ohio are being forced to adopt certain municipal income tax provisions that were adopted in House Bill 49, which authorizes state officials to collect and administer municipal net profit taxes generated by businesses. If a municipality does not amend its income tax code as dictated by the state, the state would not disperse business tax profits back to the municipality.
Cities were already collecting tax profits generated by businesses within its community, but the state decided to step in and require businesses to file their taxes through a portal on a state run website and then charge each city a fee. In effect, it is state sanctioned pick pocketing.
“We are part of a large consortium of villages and cities that are allowed to initiate income taxes by the Ohio Revised Code,” said City Manager John Applegate. “If we don’t adopt this the state can prevent us from collecting income taxes, period.”
The City of Toledo has filed a case challenging the H.B. 49 municipal income tax provisions in the Lucas County Court of Common Pleas. That case is pending.
Union contends that the municipal income tax provisions in H.B. 49 and Section 718.04(A) of the Ohio Revised Code violate the Home Rule Amendment. Nevertheless, the city is compelled to adopt H.B. 49’s municipal income tax provisions to avoid any doubt or taxpayer challenge as to the city’s ability to impose a municipal income tax under the terms of Section 803.100 of H.B. 49 and Section 718.04(A) of the Ohio Revised Code.
Clayton recently adopted a similar ordinance in February to avoid losing out on municipal net profit taxes.
Union, Clayton and almost every municipality in the state is party to ongoing litigation seeking a declaration that the H.B. 49 municipal income tax provisions and Section 718.4(A) of the Ohio Revised Code and other provisions of Ohio law that usurp the powers of local self-government are unconstitutional.
The ordinance adopted at Monday’s council meeting clearly states, “the City of Union, by enacting this ordinance, does not concede the legality of H.B. 49’s municipal income tax provisions, Section 718.04(A) of the Ohio Revised Code, or any other law that is subject to the suit in which the City of Union is participating, and reserves its right to continue prosecution of that lawsuit…”
The firm hired by municipalities to fight the state over its centralized collection of taxes is the best in the state, according to Applegate.
“They are familiar with tax legislation, Home Rule and all the rest of the things that we are fighting for,” Applegate noted. “The general assembly is so good at being able to tell everybody else how to do their business when they can’t take care of their own. They are charging us a half of a percent to do what we are already doing, and that we are still going to be doing. We all look at it as a money grab.”
Applegate said that if the state succeeds in its effort to collect commercial taxes at the expense of municipalities, it will then attempt collect individual citizens’ taxes in the same manner.