A severance tax might help if put to good use
At first, Gov. John Kasich’s proposal to place a severance tax on the shale industry sounded like a bad idea. After all, adding taxes to an industry that had been heralded as the economic savior of our region of the country, would discourage its development, wouldn’t it? And, weren’t we supposed to be flush with the riches reaped from the full employment and the lucrative mineral rights leases from this new-found liquid and gas gold?
But now, a couple of years into the shale boom, we’re beginning to see that the local economic benefits may be slow in developing, or though we hope otherwise, may never materialize.
We’re not getting the jobs we had been promised. Most drilling companies are bringing in employees from out of state, instead of hiring local people. The only businesses that appear to be growing as a result of the so-called boom are restaurants and hotels, which are prospering by feeding and housing the out-of-state workers while they’re in our area.
So, if we’re not getting the full benefits of this new industry, why shouldn’t we benefit from the cut in state income tax Kasich’s fracking tax would pay for? And while lower income taxes would be welcome, we believe earmarking a large portion of the tax revenue for repairs to the infrastructure of the areas affected by the drilling would also be a good use for this extra money.
One needs only to sit near the intersection of Market and Lincolnway in Lisbon for a short while to see the number of the oil industry’s heavy duty trucks moving on our streets and further damaging our already crumbling roads. And we’re sure the same is true in other affected towns.
Opponents argue that excessive taxes discourage businesses and industries from locating in Ohio. This is true with other industries, but the shale industry must go where the oil and gas reserves are located, it can’t move elsewhere.
Besides, Kasich’s severance tax proposal is relatively low – 40 to 48 percent lower – when compared to the taxes imposed in surrounding states involved in the shale boom
Kasich has vowed to pursue this tax, despite the reluctance of his fellow Republicans in the legislature to pass it. And we hope he eventually succeeds.
It’s surprising that in our state which has a history of pursuing change through ballot referendums, we haven’t already seen a movement to place a fracking tax on the ballot. The fracking opponents could also see this as a way to discourage the industry that they oppose.
Kasich’s proposal would probably result in a lower tax than one imposed by voters. We think the legislature should proceed with Kasich’s severance tax, but make sure that a good portion of that tax money is earmarked for infrastructure repairs in the counties where most of the drilling is taking place.