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Columbus
Dispatch...
Boom
gets
bigger: editorial
Lawmakers
shouldn’t shy away from modest severance-tax proposal
March 31, 2012
Any
Republican state lawmakers who balk at a proposed modest increase in
Ohio’s low
severance taxes should be reassured by the latest evidence that the
state holds
a treasure that gas-and-oil companies want: BP plans to lease 84,000
acres in
Trumbull County.
The energy
giant has struck an agreement with the Associated Landowners of the
Ohio
Valley, a group representing the owners of mineral rights in the
shale-rich
area.
BP joins
Chesapeake Energy, Anadarko Petroleum Corp. and Devon Energy in making
pioneering investments in Ohio’s Utica shale. These major industry
players
presumably know all about Kasich’s proposed plan, and they don’t seem
to be
scared off by the prospect of a reasonable severance tax.
That’s not
surprising, because what Kasich is proposing still would be well below
the
taxes charged in neighboring shale states. And even the modest
severance tax of
4 percent for crude oil and natural-gas liquids would be phased in,
allowing
drilling companies to recoup their start-up costs before the full
amount
applies.
Moreover,
Kasich plans to turn the severance-tax increase into a benefit for all
Ohioans,
by applying every penny of increased revenue to lowering income-tax
rates for
the following year.
That’s an
appropriate way to allow all Ohioans to share in the state’s newfound
natural-resource wealth, and fair compensation for a resource that
never can be
replaced. Just as important, it could be a significant boost to the
economy,
because small businesses, where most new jobs are generated, often pay
taxes
through personal income tax; they stand to be among the greatest
beneficiaries
of an income-tax cut.
But the Republican-led
House stripped this sensible plan from a bill filled with mid-biennium
adjustments to the current two-year state budget, and they did so for
contemptible reasons: fear of offending deep-pocketed energy lobbies
and fear
of running afoul of the “pledge” many made at the urging of anti-tax
crusader
Grover Norquist’s group, Americans for Tax Reform.
For what
it’s worth, Norquist is on the record saying that lawmakers can vote
for
Kasich’s plan without violating his group’s no-new-taxes pledge,
because the
severance-tax increase would be wholly offset by the income-tax cut.
But that
hardly should matter; Ohio lawmakers, as well as those in Congress, owe
their
allegiance to the public they’re elected to represent, not to an
unelected
ideologue. Net tax increases are to be avoided whenever possible, to
avoid
hobbling an economy struggling to recover. But whatever decision is
made on
taxes should be based on the needs of constituents, nothing else.
As Ohio’s
shale boom gains steam, lawmakers should put Kasich’s plan in place so
the
entire state can benefit.
Read this
and other articles at the Columbus Dispatch
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