June 19, 2013
June 19, 2013
Representative Hagan’s proposal for a severance tax offers the largest producers a chance to join Ohio as good citizens, to set a good example for their suppliers, to pay their fair share, and to build a stronger Ohio.
People and businesses contribute to public services in the state, to police, fire protection, schools, roads, clean water, and all the things we need. We pay taxes. We pay income and sales taxes and businesses pay business taxes.
Natural resource industries present a special case. They – uniquely – take something precious from the land that can be taken only once, and they profit from that valuable commodity. They remove, or sever, natural resources from the land. That is why, all over the world, these kinds of firms pay severance taxes – special taxes on the mining and drilling of precious resources, resources that will never be available to anyone else again.
Horizontal drilling at the scale it is being done today, and in the locations it is being done, is relatively new, growing within the past decade. Accidents in sparsely populated regions like North Dakota and Wyoming affect few people directly. But Ohio is densely populated. There are people everywhere, even in our rural places. Urban areas large and small take water from reservoirs fed by rivers and streams that flow out of Appalachia. Concerns about how horizontal drilling will affect our air, water and land must be taken into consideration.
External costs of production also are a cause for concern. Policy Matters Ohio has joined with research groups in our neighboring states – West Virginia, Pennsylvania and New York – to learn about the impact of oil and gas drilling on communities where the rigs are going up. After the thrill of the check in the mailbox, what happens? We are learning about impacts in the following areas:
Representative Hagan’s proposal for a severance tax offers the largest producers a chance to join Ohio as good citizens, to set a good example for their suppliers, a chance to contribute, to pay their fair share, and to build a stronger Ohio. This proposal for a severance tax is responsible, straightforward and simple:
There is a term, “the natural resource curse,” which describes a peculiar condition of regions rich in natural resources where the people remain poor, with little opportunity. Mature oil and gas states have taken pains to provide for the future by establishing permanent funds to support economic development, education, research and development, and other drivers of economic progress.
Representative Hagan sees Ohio’s future in the same way – our precious natural resources can both create wealth today, and underwrite progress for tomorrow.
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