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Ohio House approves tax hike for shale drillers

Published on NewsOK Modified: May 14, 2014 at 8:16 pm •  Published: May 14, 2014

COLUMBUS, Ohio (AP) — After years of debate, a tax compromise backed by the oil and gas industry cleared the Republican-led state House on Wednesday amid criticism from Democrats who said it failed to adequately protect local communities and the environment and from Gov. John Kasich, who wanted a bigger tax hike.

Kasich, a Republican who has tried previously to raise taxes on the industry, said the compromise doesn't raise enough revenue to cover a statewide income tax break.

The legislation passed the House, 55-35, one day after it cleared a committee by one vote. It goes next to the Senate.

Democrats expressed disappointment and frustration over taxing drillers at a severance tax rate of 2.5 percent on horizontal wells, which opponents said isn't enough of a return to compensate the state for the resources and related infrastructure impacts.

The rate is less than the 4 percent Kasich initially sought and below other states in the region, but the industry has said it's four times what other Ohio industries pay on gross receipts through the state commercial activity tax.

Oil and gas producers have said a higher tax stands a chance of scaring off potential hydraulic fracturing, or fracking, development that's taking place mostly in the eastern part of the state.

Rep. Mike Foley, a Cleveland Democrat, called it "irrational" not to raise the tax to a level, in his view, that raises enough to remediate the environmental and infrastructure impacts of drilling.

"I'm frustrated that the science (on climate change) is out there, the science is clear and no one seems to be paying attention to it," he said.

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