Kasich’s Budget: Lower Income-Tax, Higher Sales

Governor Kasich has released a 859 page state budget proposal looking for a $3.1 billion, two-year increase in sales tax and “other taxes” in an effort to pay for a 17% income-tax cut.

“At a time when the national economy continues to recover at the slowest pace since WWII and the future economic picture is unclear, continuing to practice conservative budgeting and fiscal restraint is the prudent course. That is why my Executive Budget for the next two fiscal years will begin – as our Administration’s budgets have always begun – with conservative, responsible priorities that work to hold down the growth of state spending in ways that make government leaner, more efficient and more responsive to the needs of our citizens.” Kasich wrote in his opening address.

Kasich address the major plan in section B-6, citing the exact numbers of his tax plan, including raising cigarette tax, e-cigarette tax:

“To offset the revenue foregone as a result of the income tax changes, the Executive Budget also proposes an expansion of the sales tax base to a number of services not previously covered, with this expansion accompanied by a permanent 0.5 percent increase in the state sales tax rate, from 5.75 percent to 6.25 percent. Further contributing to offset the revenue that would be foregone as a result of the income tax reductions are several changes to the cigarette and other tobacco products (OTP) taxes. The cigarette tax rate would be increased from $1,60 per pack to $2.25, the tax rate on other tobacco products would be increased in order to equalize it with the $2.25 per pack tax on cigarettes, and “vapor products” such as e-cigarettes would be subjected to the OTP tax. Additional offsetting revenue would come from a new severance tax on the products from horizontal wells, with rates of 6.5 percent on the gross receipts from oil and natural gas and 4.5 percent on the receipts from natural gas liquids.”

Kasich’s plan, as previously reported has huge provisions for education and new technology to define Ohio as part of a “tech corridor,” specifically in the development of smart highways such as I-270.

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