Ohio Court Upholds Tax Collection From Grocers

In a blow to grocers, Ohio’s Supreme Court has ruled the state’s commercial activity tax (CAT) is constitutional and not an excise tax on food.

COLUMBUS, Ohio — In a blow to grocers, Ohio’s Supreme Court here has ruled the state’s commercial activity tax (CAT) is constitutional and not an excise tax on food.

The 6-1 decision overturned a district court finding in favor of supermarket operators under the Ohio Grocers Association, which had sued for an exemption from the CAT — a business tax enacted by the state in 2005.

Because the CAT is calculated from gross receipts, the association contended it was a tax on food sales. The tax is a flat fee of $150 for businesses with $150,000 to $1 million in annual sales and is assessed at 0.26% for businesses with more than $1 million in sales.

The Supreme Court ruled the CAT was a franchise tax levied on all businesses. About $730 million in tax revenue was at stake, according to published reports.

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