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Ohio House Approves Raising Severance Tax For Oil And Gas

The Ohio House of Representatives has voted to increase the state severance tax on oil and gas from less than 1 percent to 2.5 percent. As Pennsylvania continues to debate whether it, too, should impose a severance tax on the booming Marcellus Shale play, some Ohio democrats say the proposed hike is not good enough.

Republican Gov. John Kasich wanted a bigger tax hike, as well. But Ohio Rep. Matt Huffman, who sponsored the bill, said he ended up with 2.5 percent because “that was what I thought we could get done. That was what all parties could agree to.”

Huffman said if the bill becomes law it will give both industry and government clarity, allowing both to plan for the future.

The bill proposes to allocate $21 million of the collected funds to the Ohio Department of Natural Resources for industry regulation and reclamation efforts, and 17.5 percent would benefit local governments. But the largest percentage of the money would help fund income tax relief in the state.

Rep. Mike Foley, of Cleveland, said most Democrats opposed what he considers a low severance tax and the way in which it would be used.

“It’s a giveaway both to the oil and gas industry, who are going to be digging in the Utica and Marcellus Shale from all over the place, but it’s also a giveaway to the rich,” Foley said. “I’m frankly disgusted by it.”

The bill now heads to the Senate for debate. Republicans hold the majority of both the state House and Senate seats in Ohio.

Pennsylvania has no severance tax for oil and gas. Instead it charges fees on each well. 

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