By Ty Higgins, Ohio Ag Net
It was a who’s who of Ohio Agriculture joining Governor John Kasich at a mid-July press conference in Columbus. Alongside Ohio’s top official were three men who have served in the Director’s chair at ODA — Fred Daily, Jim Zehringer and current leader David Daniels.
The reason for the pow-wow was to show support of a plan that Kasich has put on the table for Ohio’s legislature to contemplate. This plan would lower the state’s income tax by raising taxes on shale drillers, ultimately creating a tax cut that could be worth $500 million annually.
“It’s a two-part program that would modernize Ohio’s 40-year old severance tax law that begs to be updated,” Dailey said. “Those funds would then be used reduce income tax for everybody in Ohio, across the board.”
Dailey said that will balance out the current “extremely low” severance taxes and “extremely high” income taxes. The severance tax would then be used to provide all nine categories of income levels with tax relief and not just to those in the parts of the state where the fracking boom has already had a major impact.
What will such a new tax law do to the current oil and gas success going on in Ohio? Dailey points out that all of the effects will be positive.
“Most of Ohio’s gas wells, 90% of the 44,500, will be exempted from paying any severance gas tax at all,” Dailey said. “The new wells will be taxed at a rate of 4%. Most of the out-of-state companies and their investors will pay for that tax, which is still one of the lowest severance taxes in America.”
Fairness is written all over the Governor’s proposal, according to Dailey, who is not only a farmer in Knox County but also a lease holder of oil and gas wells. Dailey claims this oil and gas boom is going to change Ohio, allowing agriculture to recapitalize and create tens of thousands of jobs in the very near term. This had Kasich’s administration hoping for immediate support from the Ohio Farm Bureau Federation, which it did not receive.
“The place we are in right now is trying to decide what is in the best interest of our farmers,” said Joe Cornely, Senior Director of Corporate Communications for Ohio’s largest farm organization. “We have heard from the Governor and from the folks in the oil and gas industry and we have gathered data from unbiased third-parties. We are in the process of putting those findings in member’s hands to help them reach informed conclusions.”
Cornely said the process could take a long time, especially if it takes the route of a formal policy development process. That means the issue of the new tax proposal would be acted on at Ohio Farm Bureau’s Annual Meeting that takes place in early December.
“I’m very respectful of the policy making process that Farm Bureau has,” Dailey said. “I think as they gather the facts they too will support this concept.”
This legislation may be put in front of law makers before Ohio Farm Bureau decides on the issue, as there may be efforts to move on the proposal in the lame duck session of the Ohio Congress this fall.