State
Representative Jim Buchy
Severance
Tax and its Impact on Ohioans
With
the discovery of large deposits of oil and gas in the eastern part of
Ohio, we have an opportunity to work with Ohio’s oil and gas
industry to offset costs incurred by the tax payers for road
maintenance and regulation associated with the industry. As we learn
more about this growing economic benefit in Appalachia we must have a
serious discussion at the state level to determine the best
government policies moving forward.
Since
Ohio contains such an abundance of natural gas, tapping into it helps
our state in countless ways. In order to reap all the benefits of the
oil and gas beneath our feet, a severance tax must be implemented.
The revenue that is created by this tax can help sustain Ohio’s
growing economy by helping us lower Ohio’s personal income tax.
House
Bill 375 addresses the issues at hand by modifying the existing
severance tax and working with the State Government and those in the
field to establish a competitive severance tax for Ohio. The
discussion surrounding the bill development focused on the safety of
Ohioans, a competitive tax rate and funding for communities affected
by the growth in oil and gas exploration in eastern Ohio. The result
is a severance tax rate that is high enough to provide revenue for
the community, but low enough to ensure Ohio can attract more
development in our oil and gas fields.
The
first $21 million in revenue will fund the regulatory programs of the
oil and gas industry by the Ohio Department of Natural Resources.
Additional revenue produced will provide tax relief to Ohioans by
funding the Ohio Income Tax Reduction Fund, which will total more
than $325 million over the next five years.
Another
goal was to be sure that local governments would receive revenue as
well. I’m happy to say that 17.5 percent of the total tax revenue
will be distributed to local governments. This money will help to
make improvements to local infrastructure that has experienced wear
and tear as a result of the increased industrial activity in eastern
Ohio.
To
ensure oil and gas production in Ohio is safe for our people and the
environment some of the dollars will be used to increase funding for
Ohio’s orphan well program. Closing wells that are no longer in
use and have been abandoned in some cases for decades is a very
important environmental practice. This is just one more tool that
will allow Ohio to grow as an energy producer.
The
extraction of natural gas has already created many private sector
jobs and investments. House Bill 375 adds to this by providing
economic stability and long term safety precautions for oil and gas
extraction. It sets the stage for a stronger and safer Ohio, and
continued growth in the energy sector right here in Ohio.
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