Ohio House passes sales tax exemption on investment coins
- Published: Jun 19, 2015, 10 AM
Ohio’s House of Representatives has passed a bill exempting coins from sales tax. The bill now moves to Ohio’s Senate for consideration and, should it pass the Senate, approval by Ohio’s Governor John Kasich. The legislation passed the house June 17 by a vote of 81 to 11.
The bill exempts from sales and use taxation sales of investment metal bullion and investment coins. According to the legislation, investment metal bullion is defined to be any elementary precious metal that has been put through a process of smelting or refining and which is in such a state or condition that its value depends upon its content and not upon its form. Examples of investment metal bullion include gold, silver, platinum, and palladium. Investment coins are defined to be money and legal tender manufactured under the laws of the United States or any foreign nation with a fair market value greater than any statutory or nominal value.
Ron Magg, a Republication representative from Lebanon, Ohio, sponsored the bill and was joined by co-sponsor Christina Hagan, a Republican representative from Columbus. Maag said that the current taxation on all coins and precious metals means that Ohio’s precious metal dealers are losing business when individuals take their business to neighboring states. He added, “Most financial advisors recommend diversifying an investment portfolio with hard assets such as precious metals. However, the market for these assets is unnecessarily limited in Ohio.”
Maag further cited the tax laws as a reason why both the American Numismatic Association and the Central States Numismatic Society no longer hold shows in Ohio, noting that these conventions hurt tourism revenues for local economies.
A troubled history
While precious metals were made exempt from state sales and use tax in 1989, the taxes were reinstated in 2005 after the scandal involving Toledo-area coin dealer Thomas Noe, who was convicted of wrongly using state funds to make investments in rare coins.
The bill was introduced Feb. 2, and an April 14 hearing was held in the House Ways and Means committee. Ohio coin-business owners David Miholer (Executive Coin Company) and Brad Karoleff (Coins +), lobbyist and Ohio Precious Metals Association Executive Director Jeff Longstreth, Industry Council for Tangible Assets Treasurer Patrick Heller, and ICTA Executive Director Kathy McFadden testified at this hearing.
Back in 2013, similar legislation passed Ohio’s House and Senate. However, Gov. John Kasich exercised his line-item veto power on June 30, 2013, electing to remove the provision exempting investment metal coins and bullion from Ohio sales tax, stating, “There is no reason to provide preferential treatment to one class of items and not others that could possibly increase in value, such as art, sports cards, or antiques. Therefore, this veto is in the public interest.”
A May 27 report by the Ways and Means committee reports that the bill, by reducing the sales and use tax base and decreasing tax revenues, could cost the state $5.6 million per year during Fiscal Years 2016 through 2018. It reports, “Using data from the Economic Census, nationwide sales of coins, medals, and other numismatic items at jewelry stores, art stores, used merchandise stores, and miscellaneous store retailers were about $3.36 billion in 2012.” It added, “Assuming Ohio sales at between 3% and 4% of nationwide sales, taxable sales in Ohio may have been between $101 million and $135 million that year.”
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