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New Tax Debate Heats Up

Tuesday, June 26, 2007 at 8:44 AM

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The Cuyahoga County commissioners are considering whether to hike the county's sales tax by a quarter of a percent. The increase would generate an additional $42 million a year, enough to finance a new convention center which in turn would attract a medical mart. Supporters say it could bring hundreds of millions of dollars to the region. While detractors say taxes are already too high and that this proposal uses taxpayer dollars to benefit businesses that could well afford to subsidize the project themselves. We heard from both sides yesterday on 90.3's The Sound of Ideas. ideastream economics reporter Tasha Flournoy has more on the debate.

Right now the county commissioners are split two-to-one on whether to approve a tax increase and that was clearly evident on the call-in show. Commissioner Tim Hagan said the county has to embrace the tax now in order to keep the medical mart idea alive. Developers of the Merchandise Mart in Chicago would build the medical mart but only if there’s a new convention center. Hagen suggested that submitting the tax question to the voters is too risky and that the Chicago investors won’t stay in the game unless Cleveland gets serious fast.

Tim Hagan: The merchandise mart is a national company involved in 15 other communities. And, in my judgment what we’re trying to do is send them a clear message we intend to move forward.

But, Commissioner Peter Lawson Jones points out that Cuyahoga County’s 7.5 percent sales tax is already the highest in Ohio. And, he wants other ways to finance the new complex to be explored first, such as increasing the hotel and bed tax. Or asking state leaders for public funds.

Peter Lawson Jones: I think there are many ways to send signals to medical mart that we are interested. One of which, to me, and the best way is to pull together the coalition necessary to advocate before our state leaders to give us the resources that we need.

The public too is divided. One caller this morning spoke of the tax hike as akin to corporate welfare.

Jim (caller): Tim Hagan has no business using our tax money to give money to these companies to build them a medical mart. If they’ve got stuff to sell, Medical merchandise. If Cleveland Clinic and their spin-off companies wanna sell their medical merchandise in Cleveland let them use all the money they’ve got, which is a lot of money.

Another guest on the Sound of Ideas, Zach Schiller, said the public outcry is less about this particular increase but the overall tax burden. Schiller is research director for Policy Matters Ohio which often criticizes Ohio’s relatively high taxation.

Zach Schiller: The issue here is not the amount of tax. It’s who’s paying the tax. Unfortunately we’ve moved toward more regressive tax, which low and middle class are paying. We’ve been reducing taxes on those most able to pay, and so that results in people’s anger.

That’s a very short-sighted view, according to supporters of the medical mart. They point out that the 50 trade shows the medical mart is expected to attract would bring several hundred million dollars a year in business to the area.

Bay Village Mayor Debbie Sutherland says how to best finance the project is still an open question but, she says there’s no doubt that the economic benefits would reach far beyond the businesses directly involved. She said it would be an economic catalyst for the entire region.

Debbie Sutherland: It’s going to make our neighborhoods very attractive, especially as some of this spin-off businesses get ramped up because people have to live somewhere. It’s not only going to benefit downtown Cleveland. I see it benefiting the entire region.

The commissioners will hold two public hearings next month before they decide whether to go ahead with the added tax. The proposal calls for it to go into effect October 1st. Citizens could force them to put the issue on the ballot but that would require more than 45,000 signatures.

Tasha Flournoy, 90.3.

Additional Information

Listen to the June 25, 2007 The Sound of Ideas broadcast (Time for Tax Talk)

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