COLUMBUS– Today, State Representative Robert F. Hagan (D-Youngstown) pushed colleagues to consider a measure that would reflect competitive tax rates on gas and oil companies while returning the revenues to local communities. The bill stands in stark contrast to the leading GOP proposal, a measure that is widely thought to undervalue the state’s natural resources and use the revenue for a tax break that favors the most affluent Ohioans.
“Ohio needs a severance tax that is competitive and reflects the needs of local communities,” said Rep. Hagan. “Our shale-drilling communities have been devastated by historic budget cuts in recent years, and any severance tax should address this reality.”
The proposal-- House Bill 212 – was introduced last June and would enact a 7.5 percent severance tax on oil, natural gas and condensate extracted from horizontal drilling. Democratic lawmakers have focused on legislation to keep Ohio consistent and competitive with other gas and oil producing states. In addition to HB 212, Reps. Jack Cera (D-Bellaire) and John Patrick Carney (D-Columbus) offered testimony today on House Bill 400, which provides landowners with more information on the activities of oil and gas companies on their land.
Other major shale states, including Oklahoma, Texas, and North Dakota, have severance tax rates that range from 7 percent to 11.5 percent, and collect anywhere from hundreds of millions to billions of dollars in revenue each year. Under the rate proposed in House Bill 212, the state could collect hundreds of millions of dollars over several years. The bill would return the bulk of revenue raised by the tax to local communities, with an emphasis placed on counties most impacted by drilling activity.A 7.5% severance tax would likely lead many drillers to turn away from Ohio entirely. Perhaps that is what Rep. Hagan really would like to see happen.
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