Ohio’s Fracking Tax May be Changing

 

By Attorney Ted Brown

With the recent boom of oil and natural gas production in Ohio, it should be no surprise that the government is looking for its share of the action.

With the use of a new technique called hydraulic fracturing, or “fracking,” and new methods of horizontal drilling, oil companies have been able to reach previously unreachable pockets of oil and gas. For farmers and landowners alike this has created a new source of revenue in both lease income and higher per-acre value.

However, with higher income means higher taxes. Governor Kasich recently unveiled a plan to relieve the tax burden on farmers and pass it on to the oil companies. The Governor's plan calls for the increase in what is known as the “fracking tax,” or tax on the amount of oil or gas recovered from Ohio lands. This tax is paid by the driller, not the land owner, and would amount to between 1.5% to 4 % of the gross income the oil company generates from the sale of “liquids” extracted in Ohio.

In conjunction with this increase, Kasich will cut income taxes by around 5%, thereby allowing the average landowner to keep more of the lease income they receive.

The plan awaits the endorsement of the Ohio Farm Bureau Federation which is seeking additional information on the impact the plan will have on oil companies before giving its support. The fear is that the companies will merely pass the additional tax burden onto the consumer through higher prices or the landowner through lower lease rates.  

Sorry, comments are closed for this post.

Visit Us On FacebookVisit Us On Twitter