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Kasich's 2013 resolution: Raise drilling tax, lower state income tax

Published: Sun, December 30, 2012 @ 12:09 a.m.

By Marc Kovac

news@vindy.com Second in a three-part series


Gov. John Kasich isn’t hiding his frustration with energy companies and efforts to block a proposed tax increase on oil and gas production in eastern Ohio’s shale deposits.

Lawmakers balked during the past session at Kasich’s plan to increase the state’s severance-tax rate, using the proceeds to implement a decrease in Ohio’s income-tax rates.

The plan will be included in a larger tax-reform package Kasich will offer in 2013.

“Modernizing the severance tax keeps us as the lowest severance-tax state in the country,” Kasich said. “There is no danger that people are running away. Since we’ve been talking about this, they’ve continued to invest billions.”

He added, “I think there’s an apprehension, if you put this on, are you going to drive somebody away? Are you kidding me? I’ve done some foreign travel, down to Houston, and every single time I meet with the industry privately, you know what they say? We should take this and run. But then they get their lobbyists and all these other people, and they obscure the issue.”

And Kasich is confident a severance-tax increase will be OK’d by the Legislature next year.

“Whatever that tax is, we want that tax to make sure that we are not penalizing companies for doing business in Ohio,” said Senate President Tom Niehaus, a Republican from New Richmond. “We want to incentivize companies for doing business in Ohio. We don’t want them moving their rigs to Pennsylvania or North Dakota. We want them here. We want them hiring Ohio workers, and we want them here a long time.”

Modernized Severance Tax

Kasich said his tax-reform package in the new year will include his proposed increase in taxes on oil and gas production.

“I’m very optimistic we can see a significant lowering of that income tax that I think would help us grow even faster,” he said. “I constantly talk to CEOs — not just CEOs that are coming in but ones that I’m trying to start getting into a relationship with. And the idea that there will be a lower income tax in Ohio appeals to all of them. ... This income tax will be focused on helping small businesses to grow and giving them the kind of relief that they need.

“Let me make one thing clear. This is about depleting resources in our state. This is about people that take out of the state, and it’s not like the severance tax is a new idea. It’s been in place forever. ... What this is really is a modernization of it to reflect the real value of what we have here in the state.”

He added, “This income tax is too darn high. People say we already lowered it and it didn’t do any good. Yeah, it’s done good — we’ve got 127,000 jobs, including a more friendly business climate. This tax, at 5.9 percent, is too high, and a comprehensive tax reform program, which we will have for you in February, is going to present the Legislature with the option to lower that tax on small business. They’re the ones that create the jobs.

“Nobody’s talking about an 8 percent severance tax, except for somebody that might end up putting it on the ballot. We’re talking about something that’s reasonable.”

Lawmaker Reaction

The outgoing head of the Ohio Senate and the ongoing leader of the Ohio House both voiced support for the governor’s severance-tax plan.

“Yes, I do expect it will get done in 2013,” Niehaus said. “I was working very closely with the governor and the industry on the issue of severance tax. While I’m disappointed that we did not get to a conclusion, I am confident that we will get there in 2013. The governor’s already talked about the comprehensive tax reform, and anytime you’re talking about a significant change in taxes... you want to make sure whatever you do with one industry, how that fits in with everything else that’s changing.”

Republican House Speaker Bill Batchelder, from Medina, said he didn’t think there was “any question we ultimately will support it. I think that we have a number of questions. ... I certainly want to make sure that what we’re going to see in that area is the kind of growth that will provide jobs in Ohio, that will bring corporate headquarters here.

“We have a number of important companies who have started work here, but we have some other ones that are sort of in and out. ... Seems to me that at this point, looking at other taxes as we are going to do, I think we want to be very careful before we impose that. Will our caucus vote for it? I think that they will. I don’t think there’s any question about it. The problem in our caucus and with me is simply I’m not sure about the timing, and I think that’s crucial.”


1timOthy(802 comments)posted 3 years, 5 months ago

Kasich you forgot to LOWER Your pay and other elected people. This is what needs to be done soooo bad. Your a servant ! And where you work is to be for the Ohio people. IT'S NOT FOR YOUR SECURITY !

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2lee(544 comments)posted 3 years, 5 months ago

I have an idea how about lowering both? The Govt takes way to much of our money .

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3hardin54ja(20 comments)posted 3 years, 5 months ago

Long memory at work here. When Ohio tripled the income tax rate, Dick Celeste was governor. The bill that accomplished that also lowered 88 different business tax rates. So Kasich, a Republican, wants to lower taxes on individuals and raise one tax on minerals, and the Democrats taxed the H--- out of working people but gave tax breaks to businesses. It is history if you have followed Ohio government closely for the last 40 years.

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4dearthquake(9 comments)posted 3 years, 4 months ago

I want to make a point on an issue that is frequently glossed over on the local shale scene.

I live in PA, but it is pretty much the same as in OH right now. My daily commute takes me through the PA shale boom areas and into the industrial park where most of these companies have set up their offices. I can see a few of the offices from my office window.

What grinds my gears is when they talk about these companies hiring local people for the work. Take a look at any of these big diesel F350s and the like driving around with one drilling assocated company's or another's logo on the door. They ALL have Texas or Oklahoma plates.

I realize that there are spin-off and infrastructure revenues gained from drilling activity. But to try justify tax breaks for the mega-corps. by saying we will get the money on the back end of the deal via income taxes on these high paying drilling jobs is a falacy. I'd like to see a study on the percentage of locals working as rig-hands, I would venture to guess it is in the single digits if any at all. The only place I see an impact is at Sheetz, those guys love Sheetz. I talk to them occasionally in the long lines and they are all from, guess where, TX and OK.

Don't get me wrong, I am pro drilling. However, I am pro local revenue. When a company comes into a state seeking resources that are exclusive to that state, they have to pay the piper.

If I wanted to open a hot dog stand, what tax breaks or abatements would I get? I guess I'd have to hire an Oscar Meyer lobbyist before I buy a package of buns. Mega corps and mega rich play by a different set of rules. And they write the rules for themselves in the form of Super PACS, lobbyists and kickbacks. Regular folks just open the mail and pay the bills.

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