COLUMBUS, Ohio- Shoppers across Ohio will see a one-quarter percent sales tax increase beginning Sunday, the first increase in the tax in a decade.
The rate will rise from 5.5 percent to 5.75 percent, or 25 cents for every $100 spent, on vehicles, electronics, clothing and other retail goods.
Ohio lawmakers approved the increase as part of the state's $62 billion, two-year state operating budget. The increase is part of a larger package of tax adjustments that will reduce overall business and individual taxes by an estimated $2.7 billion over the next three years. That includes a 10 percent cut to the personal income tax that will be phased in starting Sunday.
Policy Matters Ohio, a liberal think tank in Cleveland, has estimated that the income-tax cuts would result in the top 1 percent of Ohio wage earners on average receiving $6,000 a year while the bottom fifth of wage earners would have to pay $12 a year.
During budget debate this year, the group proposed that Ohio offer a sales-tax credit for lower income families as a targeted way to help offset some of the impact of tax changes on poorer Ohioans. Five states offer such credits.
The Ohio Department of Taxation estimates that only 35 percent of an average Ohio family's spending is subject to the sales tax. Groceries, housing, medicines, education and many other purchases are exempt from sales taxes. Even with the latest change - Ohio's first increase since 2003 - the state's rate is still lower than about half the U.S. states.
Ohio first enacted a sales tax in 1935. The rate then was 3 percent. The rate rose to 4 percent in 1967 and to 5 percent in 1981, according to information from the state Tax Department.
In 2003, state lawmakers temporarily tacked a penny onto the tax - raising the rate to 6 percent for the next two years. In 2005, it was dropped to 5.5 percent.