HB 375, new severance tax proposal, needs strengthening

- January 14, 2014
For immediate release
Contact Wendy Patton, 614.582.0048
Full report
Download press release (1 pg)


Analysis finds tax is too low, has carve-outs, excludes fracking from CAT

The proposed new severance tax in House Bill 375 would shortchange Ohioans by undervaluing the state’s natural resources and granting up to $800 million over 10 years in breaks and exclusions, according to a new report by Policy Matters Ohio.

Under the bill, Ohio’s severance tax would remain low compared to other oil- and gas-producing states, and revenues would be directed to tax cuts favoring the most affluent Ohioans rather than filling revenue gaps. 

“Severance taxes pay for the loss of a valuable resource that can be removed only once,” said Wendy Patton, report author.  “Communities deserve a share of that value to make up for costs of extraction, to diversify the economy after the resource is gone, and to meet critical needs.” 

The report outlines eight recommendations to strengthen HB 375, including: raise tax rates on extraction; provide the state with needed revenue for oversight and other services; trim and target tax breaks in the bill; use proceeds to invest in Ohio, rather than cut income taxes; and base the tax on gross value instead of net proceeds.

Severance taxes are needed to ensure proper oversight and regulation of the fracking industry, to mitigate impacts, to meet current needs of the state, and to build diversity in the economy for after the boom is over. 

“In its current form, HB 375 actually drains resources from the state,” said Patton. “We must not lose the opportunity to harness the shale boom and invest in the future for all Ohioans.”


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