The recently introduced Executive Budget, JOBS 2.0, outlines an overhaul of the sales taxability of services on the nonprofit sector. In response to this sales taxability of services proposal Ohio Citizens for the Arts held a meeting of arts leaders from around the state, representing our membership, to discuss the impact of the proposal to arts and cultural organizations of all sizes and geographic locations. The goal of the meeting was to come to consensus on a position and next steps for consideration by the OCA Board.
The Board of Directors of the Ohio Citizens for the Arts opposes the expansion of sales taxability of services on the nonprofit sector.
Ohio’s Nonprofit Sector has a long and proud history of touching and enriching the lives of Ohio’s citizens—through arts and culture, education, healthcare, social services, research and planning, environment and more. Thousands of nonprofits throughout the state solve community problems, care for those in need, serve as partners with business and government; and enhance tourism and economic development to strengthen Ohio’s communities.
The reason for our concern about the sales taxability of services recommended in the Executive Budget is the impact it will have on our members. Currently there is not a state sales tax on admission to cultural events held by nonprofits but in the Governor’s Budget (HB 59), nonprofits will be required to collect a 5% sales tax on admission to cultural events from consumers that will be sent to the state of Ohio for its use in the General Revenue Fund (GRF). Should this reform effort pass it has the potential to negatively impact access to the arts, ticket sales, and cause administrative burdens on arts organizations, etc. which are already stretched to their limits.
The complete list of Sales Taxability of Services, within the Reforms Book of the Executive Budget, can be found athttp://jobsbudget.ohio.gov/budget/Reforms_14-15.pdfin Appendix F starting on page 75.
All of our members, and the nonprofit sector, are affected by the proposed tax reform. Arts and culture nonprofits in our state were created solely for the benefit of the citizens of Ohio. They provide artistic and creative products, educate our children, and provide a cultural vitality in every town in Ohio. They do this all the while improving the quality of life, bringing and maintaining businesses in the state, and providing jobs which generate revenue through local and state taxes.
Nonprofits make a positive difference:
• A nonprofit does not operate in an effort to build wealth or revenue for the benefit of the owner, directors or shareholders. The main goal of a nonprofit is to generate funds and volunteer assistance to help further its selected cause.
• The Internal Revenue Service recognizes the benefit of nonprofits and designates them in a 501(c) classification in order to file as a charitable tax-exempt group.
• One of the main purposes of a nonprofit organization is the opportunity to assist the community via resources and volunteer work.
• Nonprofits create jobs and generate revenue through payroll taxes at the local, state, and federal levels.
Please take action by contacting your House and Senate members to let them know why the proposed sales taxability of services on the nonprofit sector is not a good idea.
• Nonprofits deliver vital community services.
• Nonprofits give voice to the people they serve.
• Nonprofit contribute to vibrant communities
• Nonprofits advance solutions for challenges facing society
• Nonprofits benefit society and encourage civic involvement.
• Nonprofits encourage economic development.
• The economic impact of Ohio’s Nonprofit Sector:
Employs 482,500 people – 9.8% of the state’s workforce
Generates more than $76.5 billion in annual revenues
Ohio foundations annually give more than $1.2 billion
• It simply does not make sense to tax nonprofit organizations, whose mission is about serving the public rather than generating revenue.
• The adverse effects of a sales tax on nonprofits will be counterproductive and cost more to the state than the taxes it could generate.
• Nonprofits doing business in Ohio’s ‘border’ towns and cities – near Michigan, Kentucky, Indiana, and Pennsylvania may choose to take their businesses to a more tax friendly state.
Executive Budget, JOBS 2.0,http://jobsbudget.ohio.gov/budget/Reforms_14-15.pdf
Ohio Association of Nonprofit Organizations, Ohio Nonprofit Sector Report,http://www.oano.org/Docs/OANO%20Sector%20Final.pdf
Independent Sector, Ohio Independent Sector Report State Profile,http://independentsector.org/uploads/Policy_PDFs/stateprofiles/ohio.pdf