Ohio’s attractiveness for energy exploration fell from second place to fourteenth in an annual industry survey conducted by the Fraser Institute, a Canadian free-market research group. Ohio tumbled twelve spots in the Institute’s 2012 Global Petroleum Survey based on oil and gas executives’ responses, some of which cited the severance tax hike proposed by Governor John Kasich, a Republican.
One executive quoted in the results opined, “The recent proposed tax increase and new regulations make investment in Ohio much less desirable[.]” Although Ohio remains one of the survey’s “Most Attractive” locales for energy exploration, the drop puts Ohio behind West Virginia and much closer to Pennsylvania in the rankings.
In a breakdown of the 2012 survey results, Ohio’s tax environment was listed as a deterrent to investment more frequently than the tax environments in Pennsylvania and West Virginia.
The Ohio General Assembly has not taken action on Kasichs severance tax proposal, but state Rep. Lynn Wachtmann told reporters in June that legislators were working to make the combined severance tax increase and income tax cut more palatable to legislators.
Mike Dittoe, spokesman for Ohio House Speaker Bill Batchelder, confirmed that members of the Republican caucus were working with the governors office on the governor’s proposal and said legislation could be introduced as soon as November of this year.
The potential influx of capital investment to reach and process recently discovered shale reserves could create hundreds of thousands of jobs in Ohio and contribute billions to the state’s economy if optimistic projections prove accurate.
While supporters of Kasichs severance tax plan insist it is not a net tax increase because revenue would be used for a nominal income tax rebate to Ohio taxpayers, the National Taxpayers’ Union (NTU) rebuked Kasich for his proposal. NTU is the nations largest taxpayer advocacy organization.
Fellow taxpayer advocacy group Americans for Tax Reform (ATR) informed Ohio legislators in March that Kasich’s proposal was compliant with ATR’s Taxpayer Protection Pledge, but expressed reservations. ATR suggested Kasichs tax rebate proposal be accommodated by cutting government spending as opposed to “raising taxes elsewhere.“