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Apparent Compromise Expected on Severance Tax Proposal for Oil and Gas Drillers

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It appears a compromise has been brokered on changes to the taxes paid by oil and natural gas drillers. Statehouse correspondent Andy Chow has more on the proposal and what the drilling industry thinks about the new plan.

Tuesday, May 6, 2014 at 5:33 pm

For years state officials have been working on creating a new severance tax rate, as the shale gas industry continues to grow. This tax is the collection on gross receipts of drilling companies.

Sources say a new proposal would set that rate at 2.5 percent. That lands right in the middle -- between the House’s plan of 2.25 percent and Gov. John Kasich’s proposal of 2.75 percent.

Tom Stewart, executive vice president of the Ohio Oil and Gas Association, says his group likes the bill, but will still lobby for an exemption from another tax known as the Commercial Activity Tax.

“In light of the fact that we would be agreeing to essentially 10 CAT taxes," Stewart said, "they shouldn’t be piling on by adding another CAT tax. Because this industry has agreed to a taxing scheme that is specific to a very unique industry. There’s precedents for doing that in the creation of the Commercial Activity Tax. We believe we fall in that group as well.”

This new plan is expected to be introduced this week.

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