Ohio Issues New Fracking

Tax
By: Jaeydah Edwards
In recent years, Ohios development of oil and gas extraction from fracking has exploded.
This explosion has left local communities with the burden of carrying the costs associated with
the flourish. Ohios tax rate on oil and natural gas is less than a half percent. This is much lower
than other oil and gas producing states. This increased tax can be very beneficial to Ohioans
because it will provide more money for several programs.

Due to Ohios low tax rate on oil and gas production, Ohio lawmakers are discussing
raising the states severance tax. Ohios State Director Gavin Devore Leonard stated, We've
been looking at this for so long. It says in the report what we know, which is that the rates are too
low, that there's nowhere lower in the country, and we just feel that it's time to act on this instead
of keep talking about it." Gov. John Kasich also supports a higher tax, and several Ohio
organizations are pushing for 5 percent to better compensate for increased infrastructure needs
and better regulatory oversight. However, some drillers do not agree with the increased tax.

Many Ohio drillers have opposing views. Kasich's two-year budget plan, unveiled earlier
this year, would charge horizontal drillers in eastern Ohio a severance tax of 6.5 percent for
crude oil and natural gas sold at the source. Natural gas and natural gas liquids that go through
processing would be assessed a 4.5 percent tax per thousand cubic feet. The governor's budget
projects the tax hike would bring in about $260 million during the next two years. The
administration's plan calls for 20 percent of the state's severance tax revenue to go to local
governments in eastern Ohio, where energy companies have increased horizontal drilling.

As Ohio citizens, we feel that this increase in the fracking tax is very good for our state
because 20 percent of the tax revenue will go to local governments in eastern Ohio. This
additional money can help pay for proposed tax cuts to business and personal income taxes in
Ohio, as well as local infrastructure.

This issue relates to federalism in the United States because due to federalism, the states
have their own governments that allow them to make laws. Federalism divides the power of the
government into two levels. Some powers are delegated to national government, while other are
reserved for the states. Under federalism, the states have their own courts, laws, and
constitutions. If there is an issue that needs to be tended to in the states, they can make a law that
addresses that issue. This can be done without interference from the national government. Due to
the low tax on fracking, the Ohio government plans to issue a higher tax. Ohios government can
do this due to federalism. This higher tax will provide more money for our local governments.
This new tax can be very beneficial for our state.