150-year-old state manufacturing tax gone

LIMA - The end of a 150-year-old state tax Monday will be a blessing to some and if not a curse, at least a concern, to others.

Monday marked the last day of collection on the state's tangible personal property tax on machinery, equipment and inventory used in business.

For decades, analysts criticized the tangible personal property tax as hurting Ohio's ability to attract business investment. In 2009, Ohio will join a group of nine states without a general business tax on tangible personal property, according to the Ohio Department of Taxation.

The state eliminated the tax in 2005 and Gov. Ted Strickland kept the reforms in his budget.

For manufacturers, the tax was "onerous," and they appreciate its demise, said Marcel Wagner, president of Allen Economic Development Group.

When talking with prospective companies wanting to locate in Ohio, the tax's elimination is a positive for the marketing message, Wagner said.

The elimination of the personal property tax, Ohio's largest local business tax, is expected to save business owners about $1.6 billion annually. The phase out is part of a larger series of reforms.

"This is a historic achievement, one that ultimately should put Ohio in a stronger position to compete for business investment," said Ohio Tax Commissioner Richard A. Levin.

The tax's elimination has long concerned school districts, as it was a major revenue source, Wagner said.

While a new commercial activity tax is supposed to compensate districts for lost personal property tax income, many officials remain skeptical that their districts will be made whole with the tax changes.