Ohio House Committee Votes To Raise Tax On Oil And Gas Drilling

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A state House committee has narrowly approved legislation raising Ohio's tax on oil and gas drilling despite objections from Democrats and anti-tax Republicans.

It cleared the Ways and Means Committee by a single vote Tuesday, after years of debate. The full House could vote Wednesday.

The compromise imposes a 2.5-percent severance tax on horizontal wells, including those extracting resources through hydraulic fracturing, or fracking.

That tax is less than Republican Gov. John Kasich wanted but more than the industry would've liked.

Fifteen percent of tax proceeds go to restore state local-government and library funds; to fund budgets in host counties; to fund competitive infrastructure grants; and to set up a long-term trust fund for drilling counties. The vote came after money to county budgets in the bill was halved.

Preparation for a vote on increasing Ohio's tax on large oil-and-gas drillers is underway.

The Ohio House panel will vote on the issue that includes a compromise that will return more proceeds to local governments.

The tax will impose a 2.5-percent gross receipt tax on operations that produce large volumes. This will include those conducting hydraulic fracturing in eastern Ohio.

The bill will go before the Ways & Means Committee where the House panel is expected to reserve 20 percent of tax proceeds, after the first $21 million, That's an increase from the 15 percent that was previously proposed.

Ohio Republican Governor John Kasich has strived to counteract statewide income-tax by pushing for this drilling tax increase. The drilling industry has also been heavily involved, generating revisions to Kasich's plan and sending them to the House.