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House Democrats Say Severance Tax Plan Just Another Tax Shift, Shortchanges Communities

May 14, 2014
Democrat Newsroom

Most House Democrats today voted against House Bill 375, legislation that increases the tax rate on oil and gas drilling to largely pay for an income tax cut in Ohio.

House Republicans’ plan to alter Ohio’s severance tax to two and a-half percent and would establish Ohio as the only state in the country to require oil and gas revenue—which is predominantly generated in rural and Appalachian working-class communities—to pay for an income tax cut that disproportionately favors Ohio’s wealthiest citizens. 

A review of oil and gas taxation policies across thirty-five states that levy a tax or fee on drilling production shows that no state uses any amount of oil or gas revenue to pay for any level of income tax reduction.

Quotes from Democratic lawmakers throughout the state are below:

“Ohio Republicans will stop at nothing to pad the pockets of the wealthy and well-connected. No other state in the nation uses taxes on oil and gas to fund tax cuts for millionaires. This is a missed opportunity to do the right thing by Ohio’s local communities that are on the front line of confronting new challenges from this burgeoning industry.” --Democratic House Leader Tracy Maxwell Heard (D-Columbus)

“Oil and gas severance taxes must be devoted to funding adequate inspection and oversight, plugging orphan wells, and investing in impacted communities. This bill is woefully inadequate and strips wealth from southeast Ohio to provide tax breaks for the wealthiest Ohioans.”  --Assistant House Democratic Leader Debbie Phillips (D-Albany)

“It is a sad day when we have the chance to make a difference to an entire region of the state and fall short of that goal. I have worked with local elected officials and economic development leaders over the last few months on this issue.  All have emphasized the importance of rebuilding our part of the state with money from the severance tax. Unfortunately, the House majority failed to understand the importance of returning dollars to the shale region.” --Rep. Jack Cera (D-Bellaire)

“Instead of investing in infrastructure, public safety and education in the communities adversely affected by the oil and gas industry, the Republican legislature has decided to gift the wealthiest Ohioans with an income tax cut. The severance tax rate in HB 375 is puny compared to other major shale states and wildly misguided in how it allocates the revenue raised from fracking.

“Tax breaks for oil companies and the richest top percent are a reflection of how disconnected Republicans are from the struggles of hardworking Ohio families. The opportunity to utilize our natural resources to benefit some of the most impoverished counties in our state is being squandered.” --Rep. Robert F. Hagan (D-Youngstown)

“Using a severance tax to pay for an income tax cut for the wealthiest Ohioans is more misguided GOP policy-making that hurts middle class families. The rate should be higher, and the revenue should be directed to help our local communities where the oil and gas is coming from to pay for our roads and aging infrastructure.” --Rep. Kathleen Clyde (D-Kent)

“How disappointing to use a small severance tax to give wealthy Ohioans an income tax cut rather than use the funds for responsible community services. This is a missed opportunity for Ohio.” --Rep. Nickie J. Antonio (D-Lakewood)