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Oil and gas tax could drive investors away from Ohio



Published: Wed, April 3, 2013 @ 12:00 a.m.

Oil and gas tax could drive investors away from Ohio

Over the last several years, workers and management at the GM Lordstown plant have worked hard to design and build the Chevy Cruze – one of the highest rated and best selling cars in the country. The resulting impact upon our economy is significant. Local municipalities receive increased income tax revenues from GM employees. County auditors receive increased real estate tax revenues due to increased demand for housing and plant and equipment taxes on the GM facility. Local businesses catering to GM and its employees generate additional jobs, revenues and taxes.

Now imagine that the state of Ohio decided to impose an additional 4 percent tax on every Cruze that is sold. Imagine further that the revenue generated from this new tax is distributed among all tax payers throughout Ohio. Under this scenario, two things are likely to result. First, sales of the Cruze are likely to plummet — how can it compete with other cars who are not having the tax assessed? Second, the local benefits related to the Cruze project will be diluted and passed on to other areas of the state that were not responsible for the Cruze’s success.

Current proposals to impose a 4 percent severance tax upon oil and gas production in Ohio will have an impact upon the landowners, businesses, employees and local governments in eastern Ohio, where the Utica shale is being developed, similar to the hypothetical Cruze tax. It will likely dissuade some oil and gas businesses from investing money in Ohio.

It will also funnel away revenues and benefits from the people of eastern Ohio (an area which has long struggled) to other parts of the state, many of which have taken the lion’s share of our tax dollars for many years.

Atty. Eric C. Johnson, Canfield


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