Ohio Republicans Oppose Kasich’s Plan to Tax Fracking

Currently, the state gets 20 cents for every barrel of oil produced in Ohio that costs over $100. However, there are no taxes on shale gas drilled from the state. Kasich intends to impose a small tax on fracking in Ohio. By doing so, the governor believes that this will modernize tax code on the oil and gas industry and will help the state’s economy.

Kasich voiced his support for the plan during a speech at the Stow-Monroe Chamber of Commerce, where he took out two dimes to reflect the amount of money oil companies pay for a barrel of oil just over $100.

“This is what the oil companies in Ohio are paying in tax on a $107 barrel of oil – 20 cents,” Kasich said during the speech, according to The Columbus Dispatch. “I’m not kidding you. Do you understand what I just told you? This is what they pay for taking oil out of our ground and selling it to you, by the way, for $4.30 a gallon.”

Fellow republicans in the Ohio Congress did not agree. Two days after Kasich announced his plan to raise the taxes, Republican legislative leaders announced that they would not support the tax increase. Their reasoning is that they do not want to see tax increases and state regulations on such a large industry. Many also thought the issue would not go over well with voters in a year when most House seats are up for reelection.

The governor’s office did not necessarily see this as a major tax hike, since the income tax would be cut as a result of the fracking tax increase. Kasich was shocked and disappointed that statehouse Republicans denied the tax increase.

“I am very disappointed with this decision,” Kasich told The Columbus Dispatch. “I think delaying the ability to get a modernization of the severance tax in place and not moving as quickly as we can to establish the fact that Ohio families and small businesses would be great beneficiaries — I’m disappointed that it’s not going to happen now.”

The plan itself came as a shock to many analysts, who did not expect such a tax increase to come from Kasich. Thomas Stewart, executive vice president of the Ohio Oil and Gas Association, told the Cleveland Plain Dealer that he would have expected this tax increase plan to come from Democrats, not Republicans. Stewart went on to say that he would help fight the tax hike from seeing the light of day.

Rep. Ron Amstutz (R-Wooster), Republican Chairman of the House Finance and Appropriations Committee, was one legislator who did not agree with Kasich’s plan.

“This aspect of the proposal touches on a high priority for our caucus: making Ohio’s tax burden as equitable and competitive as possible,” Amstutz said, according to the Cleveland Plain Dealer. “However, the more the members of our caucus have learned about this particular proposal, the more concerned I’ve become that there are key questions that cannot be sufficiently answered and resolved within the available legislative time frame.”

Although many Republicans were originally in opposition, some are beginning to support the plan. After Kasich’s speech at the Stow-Monroe Chamber of Commerce last week, state Rep. Kristina Roegner (R-Hudson) predicted that a compromise to the plan could be reached.

Roegner told The Columbus Dispatch that she doesn’t “want to cripple a fledgling industry when there’s so much potential there.” She went on to say that “at the same time, we want to do what’s right for all Ohioans.”

Even more impressive, Ohio Senate President Sen. Tom Niehaus voiced his support for the bill. He voiced his support only a day after an interview in The Columbus Dispatch was published, where he stated his opposition to the tax increase.

Although legislation for the tax increase has been shelved in the Ohio Statehouse, Gov. Kasich plans to continue to fight for approval of his plan.