COLUMBUS, Ohio (2/8/13)--Ohio state-chartered credit unions could see their business costs rise as result of the governor's proposed budget, the Ohio Credit Union League reported.
Gov. John Kasich this week officially proposed the Ohio biennium budget, which expands the products and services subject to sales tax, and lowers the overall rate to 5% from 5.5% (eLumination Newsletter Feb. 6).
"There are more than 80 services added that could be subject to the sales tax," John Kozlowski, league general counsel, told News Now. "The areas that credit unions could see affected are in accounting, auditing, fees for financial services, and debt and credit collections. Those probably are the most logical areas that would be affected."
The league is closely monitoring the proposal.
There are two general areas of concern, Kozlowski added. One is the additional burden an increased sales tax would have on credit union members.
The other is the additional burden placed on credit unions because of additional administrative costs that would be incurred, he said. "Some of credit unions' services--such as fee-based services--and products that weren't previously taxed could be subject to sales tax," Kozlowski explained. "For instance, even areas such as credit union sales of amusement park tickets could be taxed."
With Kasich's proposal, services subject to state sales tax would include financial services' fee income (non-interest income), insurance-related services (excluding premiums), legal and accounting services, professional services (consulting, advertising marketing, lobbying), and administrative and support services (collection agencies, credit rating services).
It is important to note the governor's budget is only a proposal, and will be introduced in the Ohio General Assembly and deliberated by the legislature, the league said.
Several credit union leagues, such as the one in North Carolina, are monitoring tax-reform proposals in their states.