seeks taxes on oil, gas drilling
would help pay to repair roads
Kasich also wants to broaden the state’s severance tax to include
and gas industry would pay an “impact fee” for deep-shale wells to
cost of infrastructure damage caused by oil and gas extraction, part of
package of taxes and fees for the industry that Gov. John Kasich soon
confirmed his intentions to The Dispatch yesterday and said he has
contact with industry leaders regarding his plans.
occurring as energy companies invest billions in leases to drill for
gas in Ohio’s Utica shale, and amid rising concerns about the
consequences of drilling.
activity in the state is expected to increase truck traffic on rural
potentially damaging roads and bridges.
“We have to
make sure we have impact fees,” Kasich said. “At some point, these
going to benefit, but in the early years, when it comes to the erosion
and infrastructure, we need to make sure that these locals are going to
be in a
position to manage their infrastructure.”
to the fee — the amount has not been determined — Kasich wants to
state’s severance tax to include natural-gas liquids. The tax now
the withdrawal of coal, natural gas and other resources but does not
natural-gas liquids such as propane.
proposals probably will be included in Kasich’s midbiennial budget
be introduced in the first half of this year, although they could be
separately before the budget review is unveiled, he said.
head off this talk of new taxes, the Ohio Oil and Gas Association is
a report projecting that state and local governments will see a $1
increase in annual tax income from the industry by 2015 under the
system. That would represent a 4 percent increase in proceeds from all
businesses, said the report, produced by Kleinhenz & Associates
not good policy to start a new tax because you can,” said Tom Stewart,
executive vice president of the trade group.
advocates say that new taxes are a good idea if some of the proceeds go
communities that need to cover costs related to drilling activity.
be more and more stress on local communities to have the fire and
support there to help fund the infrastructure that’s needed” for
Trent Dougherty, a staff attorney for the Ohio Environmental Council.
lawmakers need to be careful in deciding how to structure a new tax,
Donald Tobin, tax-policy professor at the Moritz College of Law at Ohio
University. “The question is whether the tax is at such a level to
the activity,” he said.
has concerns about the state government increasing its reliance on a
source that has significant peaks and valleys.” This could be a
particularly if an increase in oil-and-gas taxes coincides with a
taxes from less-volatile sources.
he doesn’t want to “discourage development” by imposing fees and taxes
too high, but he also said that “you can’t have the local people out
having their roads undone and say, ‘It’s not my problem.’ ”
we’re going to be in a really good place on this,” Kasich said,
the levying of taxes and fees without pricing companies out of
the oil and gas industry argue that they already face a substantial tax
from four state taxes: the personal income tax, sales tax, commercial
activities tax and severance tax. They also pay taxes to county and
severance tax took in $10.6 million in 2010, most of which was related
coal industry. That is barely a blip in the state budget, but the sum
to triple by 2015, according to the Kleinhenz report.
perceptions, most oil and gas companies do not earn huge profits from
pay higher taxes, said Jerry James, president of Artex Oil in Marietta
president of the Ohio Oil and Gas Association.
kill a business before it has a chance to get started,” James said.
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