Severance tax will hurt local community
Our state officials are busy again coming up with new and extraordinary ways to remove the anticipated wealth from southeastern Ohio.
A common misconception is that the severance tax will only be paid by an oil and gas producer; however, the majority of landowners with royalty interest must pay their proportionate share of taxes on oil and gas produced from their own land.
Currently there are two proposals for the severance tax being considered:
1. Gov. John Kasich’s Mid Biennium Review (MBR) calls for a 2.75 percent additional tax on gross wellhead production with proceeds going to the Ohio Department of Natural Resources for its costs of overseeing the oil and gas industry, 20 percent of severance tax revenue would be set aside exclusively for the needs of local governments in the Utica Shale Play Region. Half of those funds would go directly to counties in the shale region to be used however they see fit, a quarter would be used for local infrastructure projects and a quarter would be held until 2025 as a “legacy fund” to help meet future needs.
2. HB 375 introduced by Rep. Matt Huffman with the backing of the Ohio Oil & Gas Association calls for a 1 percent additional tax on net horizontal well proceeds for first five years and 2.25 percent thereafter. Proceeds first go to cap idle and orphaned wells then to reducing Ohio’s personal income tax with 10 percent coming back to the region.
Both proposals offer a generous amount to be funneled back to your local government, either 10 percent or 20 percent most likely to be governed by a board of appointed individuals.
We are told that oil and gas producers are not paying their fair share, however the taxes paid by the oil and gas industry and landowners are many; income tax, property tax, motor vehicle gas tax, ad valorem tax, commercial activity tax, and sales tax.
I, for one, am resolutely opposed to any additional increase in the severance tax. I believe that our local landowners and private sector business know best how to manage their profits. I believe if the industry is not strapped with the burden of more taxes, local and regional revenues will increase substantially by the advance of businesses development and employment. I believe history is clear; if you want less of something, tax it.
I refuse to accept the falsehoods that government can pick winners and losers and that government confiscation/redistribution of wealth is somehow fair.
The citizens of southern and eastern Ohio stand at the edge of an unparalleled economic legacy not realized since the late 19th century. This tax will undoubtedly thwart any recompense if not extinguish.
Please contact your state legislators and express your position on the severance tax.
Washington County Commissioner