Rep. Schaffer Introduces Legislation Rejecting Tax Expansion On Oil And Gas Industry
HB 430 to prevent devastating tax increase on energy
January 11, 2018
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State Representative Tim Schaffer (R-Lancaster) provided sponsor testimony today to the House Government Accountability and Oversight Committee on his legislation clarifying when sales tax can be collected on the oil and gas industry. House Bill 430 rejects the Ohio Department of Taxation’s recent expansion of the state sales tax to parts of the oil and gas production industry that have been recognized as exempt since 1934.

As it is currently written, the intention of Ohio law is to exempt the exploration of oil and gas from sales tax collection. This policy is consistent with other industrial production, as well as a 1960 doctrine between the Ohio Department of Taxation and the Ohio Oil and Gas Association, where sales tax is assessed and collected at the final point of sale, not before.

“The oil and gas industry is a key economic driver in Ohio. Resolving this pressing issue is important to the energy producing areas of the state, this industry, its employees, their families and their associated businesses,” said Schaffer.

“We cannot have these businesses living in an uncertain and unfair tax climate. Like any business tax, certainty and fairness are critically important,” Schaffer said.

Schaffer also says that this reinterpretation of the Ohio Revised Code and an agreement affirming the Code in 1960 will have drastic and harmful impacts on the oil and gas industry, which includes “mom and pop” small business drillers. These excess and burdensome taxes could lead to the closure of many of these companies.

The Ohio Department of Taxation auditing staff recently changed Ohio’s sales tax policy unilaterally  and has tried to collect improper sales tax at various points of the oil and gas production, which is contrary to the current law and the doctrine created in 1960.

The legislation awaits further consideration by the House Government Accountability and Oversight Committee.      

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