Debate Over Severance Tax Rate on Drillers

By: Todd Baucher Email
By: Todd Baucher Email
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The oil business booms again here in the Valley but Ohio is trying to find a fair way to tax the fracking industry.

There already is a severance tax on drilling but Governor John Kasich wants to increase it, as part of a midterm budget package.

Washington County is just beginning to see activity from drilling companies.

But the president of the county commission, who, like Kasich, is a Republican, questions whether raising taxes on drilling activity will hurt, rather than help, the financial impact on the area.

"They pay property tax, they pay sales tax, they pay motor vehicle use tax, they have a commercial activity tax they pay, as well as an added value tax to the property," says Commissioner Ron Feathers. "And they currently pay a severance tax. How much do we want to tax an industry that is investing billions to come in, when the opportunity is there...they can leave at any time?"

There is hope for a compromise this week between the governor and the legislature on a tax increase proposal.

The two sides have been at odds over the issue for a long time.

But there isn't even any certainty on how much in revenue a severance tax increase would generate.

The state's budget office says it would raise $874 million in two years, while legislative budget leaders estimate it would raise less than one-third of that total.

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