Democratic state reps. Robert Hagan of Youngstown and Mike Foley of Cleveland announced legislation Tuesday that would boost an Ohio tax imposed on drilling for natural gas.
Their proposal would raise Ohio’s severance tax on natural gas wells to 7 percent.
The state’s effective tax rate is currently less than one-half of 1 percent — the lowest of all shale-gas states that collect a severance tax.
Some of the newly collected tax would help local communities affected by hydraulic fracturing, or fracking. Other revenue would go into a re-established fund for clean energy.
“Gas companies will be making billions off of Ohio’s natural resources,” Foley said. “Ohioans need a fair shake and a place to turn when those natural resources are gone.
“This bill would not only give impacted communities funding to repair roads and bridges used by heavy fracking trucks, but also jump-start a new energy industry to offset the used natural gas.”
Added Hagan, “To say that we, as a state, are doing enough to ensure financial fairness in natural gas extraction is a flat-out lie at this point. … What we’re asking for is a pittance.”
Last December, a Cleveland-based economic research group said Ohio could raise $538 million in revenue through 2015 if it imposed a severance tax at rates similar to neighboring states.
Texas has severance tax rates of 7.5 percent; Oklahoma, 7 percent; and Arkansas, Michigan and West Virginia, 5 percent. Pennsylvania has no severance tax but is considering one.
Policy Matters Ohio has urged Ohio to raise its severance tax rate on oil and gas drilling to 5 percent.