OMA Urges Caution on Proposed CAT Repeal

This week, the OMA testified before the Ohio House Ways and Means Committee on House Bill 234, legislation that would repeal the state’s Commercial Activity Tax (CAT), a manufacturing-friendly gross receipts tax that imposes a single low rate of 0.26% on business’ in-state gross receipts above $1 million. (Out-of-state sales are exempt.)

The CAT was created in 2005 — with the support of the OMA — to replace Ohio’s antiquated taxes on corporate franchises and tangible personal property. Prior to the CAT’s enactment, Ohio was at a major disadvantage in attracting new manufacturing due to the machinery and inventory tax.

At this week’s hearing, Rachael Carl, the OMA’s director of public policy services, told lawmakers the CAT has largely been successful, noting that multiple studies have found Ohio is one of the best states in the nation in which to do business. She urged legislators to use caution when considering CAT repeal.

Carl said, “If Ohio can truly forgo the approximately $2 billion in revenue generated by the CAT, we are in. But should the state find itself in a situation in which the foregone revenue becomes an issue for balancing its budget, a repeal-now-replace-later approach would create uncertainty for businesses everywhere.” 1/19/2022