ANNA — Anna Village Council is considering reducing the income tax credit for taxpayers who pay municipal income taxes to other communities.
Anna’s current income tax rate is 1.75 percent. Anna now allows full credit for income taxes paid to other communities. The proposed legislation would limit the credit to 1.5 percent for municipal income taxes paid to other communities.
Generally, municipal income taxes are paid to the municipalities in which a taxpayer works. There are relatively few employers within the Anna village limits; therefore, relatively few income taxes are collected for use by the village. The village is proceeding with the annexation of an area along the east side of Interstate-75, along with the extension of water and sewer lines to that area, but it will take years for growth in that area to help the current income tax base. However, the income tax issue is an immediate problem for the village.
Mayor Mark Pulfer said that “Anna has suffered a serious loss of revenue from the Ohio Local Government Fund since 2010, which has strained Anna’s budget and activities.”
The village of Anna should be rebuilding at least two to five blocks of street per year, according to a village release. Grants and loans allow the rebuilding of about two blocks every second or third year. The release claims that asphalt resurfacing should be taking place at a rate of two to three times of what is afforded now.
“The community is falling farther and farther behind on drainage, pavement and road conditions. This will not address all of the needs, but would help move us in the right direction,” the release said.
Limiting the credit paid to other communities is not a new concept. The following communities in the area have limits, and some don’t even allow any credit at all: Cridersville, Celina, Arcanum, Carey, Clayton, Elida, Germantown, New Carlisle, New Paris, Paulding, Russells Point, Rushsylvania and West Milton.
The change in income tax credit would be retroactive to Jan. 1, 2018.
“Administratively, it is a nightmare to make any income tax changes mid-year and the village council is concerned that we can’t afford to wait until January 2019. To allow for the lag in tax collections, a full year would be lost in the collection process. The ‘credit’ issue is estimated to produce from $100,000 to $130,000 per year, and the proceeds would go into the general fund to be distributed as needed,” the release said.
The policy change would have no effect on Anna residents working in Anna. It would affect Anna residents who work in communities with income tax rates that are 1.75 percent or higher. It would have no effect on Anna residents working in communities that have income tax rates that are no higher than 1.5 percent.