Latest Ohio Legislature Bill on Severance Tax 12/2013

Here is link to the latest bill on severance tax  for Ohio.

http://www.legislature.state.oh.us/bills.cfm?ID=130_HB_375

Here is comment by the Ohio Oil and Gas Association on this bill; they seem to like it.

How will it affect royalty owners?

http://www.ohio.com/blogs/drilling/ohio-utica-shale-1.291290/ohio-o...

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Permalink Reply by Hunter 1 on December 5, 2013 at 1:13pm
If the state needs money so bad why don't they lease some of their own land to help with funding , and another thing; why is the state just sitting on their minerals and not actively pursuing leases with good bonus payment , high royalties , and good lease language- almost seems as if they are just content too be force pooled- talk about a waste of revenue and bad precedent to set- anyone have any thoughts or insight into this?
Permalink Reply by Joseph-Ohio on December 5, 2013 at 1:44pm
I hope they wait to develop State wells Hunter 1.
Drill landowners private lands 1st.
The State can afford to wait.
When they do develop State land production will be worth more.
Using private citizen's production 1st makes State owned resources more valuable later.
Permalink Reply by Hunter 1 on December 5, 2013 at 2:03pm
Joseph- Ohio,
Hope you are right , just seems a little strange.
Permalink Reply by Joseph-Ohio on December 5, 2013 at 2:15pm
Yeah, I know what you're saying.
Alot of things sound strange.
Hard to sort it out when most of the time (it seems to me) interests are trying to mislead us.
0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on December 5, 2013 at 9:23am

ODNR and the Ohio EPA need to be properly funded so that landowners can be informed and protected.  Ohio's severance tax has been very low for a long time.  Increasing the tax helps build better protections and keeps agencies prepared for all the additional work that will be done.  I'm almost never in favor of higher taxes but this is one that makes sense, especially given the enormous role the state must play in the oil and gas industry.

Permalink Reply by Eric on December 5, 2013 at 9:41am

Why tax the residents and not the industry itself?  The demand for services are necessary for the industry, not the property owner. 

Permalink Reply by Billy Park Whyde on December 5, 2013 at 9:45am

In another revenue maker  targeting rural land owners in Ohio  take a look at this http://www.wksu.org/news/story/35065

Permalink Reply by Joseph-Ohio on December 6, 2013 at 6:14am
Doesn't matter.

When the industry is taxed it will pass on it's new expense to both the landowner / lessor and their customer base.

Also, IMHO the lease should be written to place the Severence Tax burden (among many other expenses including production, post production, etc.) on the E & P / lessee anyway.
0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on December 6, 2013 at 8:46am

Eric,

The property owner is irrelevant without the industry and vice versa.  It's a mutually beneficial partnership so both sides get taxed at the same rate.

Permalink Reply by Joseph-Ohio on December 8, 2013 at 10:51pm
Seems to me the politicians and the industry both are working to make the landowners TOTALLY irrelevant.

That's the core landowner complaint that we see.
Permalink Reply by Joseph-Ohio on December 5, 2013 at 10:14am
Hope my premonition never materializes but I've got a bad feeling about E & P (Lessees) in the future attempting (perhaps in court) to off-load Severence Taxes on the Landowner (Lessors) - especially in instances that the Landowner (Lessor) has Separated the Mineral Rights from the Land.

Been writing about this elsewhere on these pages but don't know if my point ever sank in with the other folks reading and writing.

As you can see anything a politician (or lobby) can think of can be brought forward in attempt to modify.

Never mind the pretext of the Landowner's investment - just sue and change the rules after the investment begins to return / pay off.
Permalink Reply by Happy Dad on December 5, 2013 at 10:35am

I disagree.  The statehouse is projecting that this new tax will raise $1.7 BILLION in new revenue over 10 years...  way more than ODNR would ever need to be a first class regulator.  The statehouse has stated its goal of using this to fund an income tax cut (to gain populist support), but this at best is an unfair redistribution of wealth and private property.  More realistically, I strongly suspect that our legislators will find other pet projects to spend this money on.

 

The state is already entitled to income tax from the production of wells in Ohio, a huge boon to be sure.  What moral justification do they have for adding on more severance (gross receipts) tax.  Why don't they do that to WalMart?

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