Reports: Ohio gas tax could mean income-tax cut

Asso­ci­ated Press

COLUMBUS — Ohio Gov. John Kasich plans to unveil a new energy pol­icy this week that could deliver a per­sonal income-tax cut by tax­ing cer­tain resources extracted through a new form of oil and gas drilling, accord­ing to pub­lished reports.

Pub­lic doc­u­ments indi­cate Kasich’s plan also makes changes to var­i­ous exist­ing petro­leum taxes and gives a tax break to some smaller oper­a­tors, The (Cleve­land) Plain Dealer reports.

The news­pa­per says the new tax struc­ture could bring $666 mil­lion to $1 bil­lion to the state over five years, based on cur­rent mar­ket prices.

“We want to lower income taxes to help out all Ohioans and to espe­cially help out small busi­nesses because they’re so impor­tant to Ohio’s econ­omy,” said Kasich, who dur­ing his 2010 cam­paign pledge to phase out the state’s per­sonal income tax.

His pro­posal, which would need leg­isla­tive approval, would tax nat­ural gas liq­uids extracted from the Mar­cel­lus and Utica shale for­ma­tions below the state. That butane, ethane and propane is reached through hydraulic frac­tur­ing. The drilling tech­nique referred to as “frack­ing” involves blast­ing chemical-laced water deep into the earth to cre­ate frac­tures and free the gas.

The oil and gas indus­try opposes the new tax, say­ing it brings rev­enue to the state through new jobs and var­i­ous other taxes, and that the tax could drive away com­pa­nies con­sid­er­ing Ohio as a site for drilling.

“We applaud the idea of reduc­ing the state income tax,” said Tom Stew­art, exec­u­tive vice pres­i­dent of the Ohio Oil and Gas Asso­ci­a­tion, told The Colum­bus Dis­patch. “We ques­tion whether one indus­try should be asked to pick up the slack.”

The new tax would be 1.5 per­cent of gross sales in the first year and 4 per­cent in fol­low­ing years, The Plain Dealer reports. About $17 mil­lion a year would go toward costs of reg­u­lat­ing the industry.

The income tax would come into play with rev­enue growth of at least one-third of 1 per­cent, and the admin­is­tra­tion projects the first income tax cuts would come in 2013.

The new tax would be off­set by the reduc­tion in income taxes, for a “rev­enue neu­tral” effect, with money shift­ing to Ohio res­i­dents, said Scott Mil­burn, a spokesman for the governor.

But Ohio House Speaker William Batchelder, a Repub­li­can from Med­ina, has expressed con­cern over the plan, said spokesman Mike Dittoe.

“The gov­er­nor and the speaker and the Sen­ate pres­i­dent have been speak­ing right­fully all year about ways to bal­ance the bud­get with­out rais­ing taxes and any form of a tax increase would mostly likely be a con­cern to the speaker and most mem­bers of the House Repub­li­can cau­cus,” Dit­toe said.

House Democ­rats Robert Hagan of Youngstown and Mike Foley of Cleve­land last week intro­duced a bill call­ing for a 7 per­cent tax on oil and nat­ural gas extracted through hydraulic frac­tur­ing. The state cur­rently asks for “a pit­tance,” Hagan said.

Posted by AP News on Mar 5 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.