Tax Commissioner Joe Testa was the lone sponsor Tuesday at the first meeting of the latest group charged with studying Ohio’s tax expenditures — more popularly known as “tax loopholes.”

Led by Sen. Scott Oelslager (R-Canton) and including Sens. John Eklund (R-Chardon) and Vern Sykes (D-Akron) and Reps. Tim Schaffer (R-Lancaster), Gary Scherer (R-Circleville) and John Rogers (D-Mentor-on-the-Lake), this committee was pointed to by the 2020 Tax Policy Study Commission as key in the state’s potential move toward a flat tax.

Testa told the committee that Ohio’s existing tax expenditures currently total over $9 billion in foregone annual revenue with the approximately 100-plus tax expenditures “seldom subject to formal review.” However, under current law, each tax expenditure is to be reviewed “at least once every eight years.”

Testa defined a “tax expenditure” as “a legislated variation from — more commonly a reduction to — a standardized tax base. … [Specifically], Ohio law defines a tax expenditure to mean a tax provision in the Ohio Revised Code (ORC) that exempts, either in whole or in part, certain persons, income, goods, services or property from the effect of taxes established in the ORC, including, but not limited to tax deductions, exemptions, deferrals, exclusions, allowances, credits, reimbursements and preferential tax rates.”

He noted they often remain in law “without a pre-determined termination date.”

Testa referenced the biennial summary of the state’s tax expenditures produced by his department in conjunction with the preparation of the budget. He said there are currently 131 tax expenditures, spread across nine different taxes. (The latest version of this document can be found online at

The sales and use tax has the most tax expenditures with 57, with a revenue loss to the state of nearly $6 billion in FY18 and nearly $6.2 billion in FY19.

It is followed by the personal income tax which has 37 tax expenditures totaling $2.3 billion for FY18 and nearly $2.4 billion for FY19.

Schaffer asked whether he had a list of those tax expenditures that they should look at: ones that are a drag on the economy. He also wanted to know which Testa believes work.

Testa said he did not but that he believes a “public airing,” where people come in to defend why a specific tax expenditure should be retained is beneficial.

Eklund wondered whether the parameters of the committee’s work should be extended beyond tax expenditures affecting the General Revenue Fund (GRF) to include those affecting local governments and non-GRF funds.

Testa said he believes all of this is fair game: all of the money is “taxpayers’ money” and should be subject to review.

Rogers asked what other data the department could share with the committee with Testa saying they can see what additional information they can provide as the committee zeroes in on a tax. Oelslager said they will be working with the department as they proceed.

Sykes asked where they should focus. Testa, saying he didn’t want to presume to direct the committee, added that the sales tax has the most or they may want to start with the oldest tax expenditures.

Asked after the hearing about his timeline for the committee’s work, Oelslager responded that they “have eight years.” He said he will be consulting with members before proceeding.