House Passes Schaffer Legislation Saving Lancaster Ratepayers More Than $2.5 Million
Measure Protects Lancaster Residents from "Tax-grab" on Natural Gas Bills
February 24, 2016
[ Tim Schaffer Home | Tim Schaffer Press ]

State Representative Tim Schaffer (R-Lancaster) today applauded House passage of legislation he sponsored that will protect Lancaster natural gas ratepayers from seeing large state tax increases in their bills.

The City of Lancaster is one of six cities and villages in Ohio that has its own natural gas department that provides natural gas to its residents. Since it’s founding over 100 years ago, the Lancaster Municipal Gas Department has not been required by the state to remit and collect sales tax on gas accounts.

Due to a new interpretation of Ohio law by the Ohio Department of Taxation, it is seeking to require Lancaster to collect and remit a 6.75% sales tax from ratepayers on future gas transactions. The State also is seeking to retroactively collect for the previous three years, which is estimated to leave Lancaster ratepayers on the hook for more than $2.5 million.

Schaffer and his joint sponsor, Rep. Wes Retherford (R-Hamilton), introduced legislation to clarify the law and protect their constituents.

“This is a grey area in Ohio law that must be resolved in order to protect the residents and businesses in Lancaster and five other communities from an unjust tax increase on a basic necessity,” Schaffer said.

“Taxing municipal natural gas is simply a ‘Tax Grab’ by the state and is just wrong on many levels,” he added.

House Bill 390 will specifically exempt gas sold to customers by a municipal gas utility from state and local sales tax.

Schaffer noted that subjecting municipal gas departments to sales taxation could have unintended consequences.

“This is a slippery slope and if we allow the state to use this interpretation of the tax code, who knows what other essential city services could be sales taxed next? Trash collection? Snow removal? Water? Sewer?” Schaffer added.

Schaffer’s bill passed with unanimous bi-partisan support with a vote of 93-0 and will now go to the Senate for further consideration.

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