By Benjamin J. Bolinger
A bill to increase the severance tax on oil and gas drilling has been proposed in the Ohio House of Representatives. House Bill 375 would increase the severance tax for horizontal shale wells to 1% for the first five years of production, and to 2% after five years, if production remains at a high level. The bill also creates an offset against horizontal severance taxes from the commercial activities tax (CAT) and the personal income tax (PIT).
Revenue from the bill is estimated to be as much as $1.7 billion over 10 years. The revenue would fund regulations, programs to cap orphan wells and income tax cuts. The tax would not apply to operators of conventional shallow wells.
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