Group wants change to Ohio’s sales tax holiday

(The Center Square) – While the National Federation of Independent Business encourages consumers to take advantage of Ohio’s sales tax holiday, a policy group wants the state to make a change.

The business group sees the holiday as a way to boost small businesses and drive local economies when small-business owner optimism is growing around the country.

“The upcoming sales tax holiday is a great opportunity for people to shop at local small businesses and invest in their local economy,” said Chris Ferruso, state director for the federation in Ohio. “Small businesses throughout the state continue to face historic inflation and economic setbacks. By shopping small, small businesses will get a much-needed boost while customers save money.”

Lawmakers extended the tax holiday from three to 10 days this year, beginning Tuesday and continuing through Aug. 8.

The federation's June report showed its Small Business Optimism Index reached its highest level of the year at 91.5, a point higher than May. The last time the index reached that level was December.

Despite the growth in optimism, the index remained below the historical average of 98 for the 30th consecutive month.

At the same time, Policy Matters Ohio wants the state to join seven other states that offer a sales tax credit rather than a tax-free holiday.

“Policy Matters Ohio has proposed a better-targeted, more effective and less expensive sales tax credit that would help Ohioans who need and balance their need for tax relief against our collective need for the wealthy to pay what they truly own,” Baily Williams, with Policy Matters Ohio, wrote in a memo.

Williams said the expanded tax holiday expense will grow from $20 million in fiscal year 2023 to $740 million this year as nearly all goods – except alcohol, tobacco and marijuana – qualify for the tax break.

Williams’ plan would apply the credit year-round rather than during a 10-day period, giving parents flexibility.

“If our lawmakers want to provide tax relief to Ohioans who truly need it, the refundable sales tax credit is one good option,” Williams wrote. “So is expanding the earned income tax credit and making it partially refundable. Either of these options would provide targeted tax relief to those who need it at a fraction of the cost of the $740 million sales tax holiday.”