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OH: Opposition to Kasich’s severance tax plan mounts

By   /   July 23, 2012  /   News  /   Comments Off on OH: Opposition to Kasich’s severance tax plan mounts

By Maggie Thurber | Special to Ohio Watchdog

Gov. John Kasich

COLUMBUS — Several groups recently have announced their opposition to Gov. John Kasich’s proposed increase in the oil and gas severance tax.

Kasich wants to fund an income tax break for all Ohioans with the revenue. The General Assembly removed his proposal from the mid-biennium budget review legislation, but the governor is continuing to promote the plan.

The Ohio Liberty Council, a coalition of more than 75 conservative grassroots organizations, said the tax increase is unnecessary and unwise.

Tom Zawistowski, president of OLC, referenced an Ohio Chamber of Commerce report that showed state and local taxes from the oil and gas industry were $11 million in 2009 and were projected to increase to $433 million per year by 2014.

“If the governor wants to cut personal income taxes, he can use that new money to do so. It is unnecessary to raise taxes when this industry is already on track to dramatically increase tax revenue. It is also unwise to throw roadblocks in front of an industry that is critical to the economic future of our state,” he said.

Zawistowski criticized the idea that Ohio’s taxes on this industry need to be brought into line with other states. “If we have a tax advantage, then we think we should exploit that advantage and use it to attract more businesses. Then we will get more tax revenue from taxes generated by ‘downstream’ industrial and business activity,” he said.

The idea of taxing one entity to give breaks to another also met with disapproval.

“From a tea party perspective, to raise taxes on one group to give a tax cut to another group is simply redistribution of wealth,” Zawistowski said. “It is not the governor’s job to pick winners and losers; his job is to run the state government as efficiently as possible.”

Americans for Prosperity, a organization that promotes limited government and free markets, is urging its Ohio members to oppose the tax increase. In an email to supporters, it names its campaign against the tax “Tell them to STOP!”

“Unfortunately, some leaders in Ohio, including Governor Kasich, have suggested that taxes be increased on the oil and natural gas explorers to fund regulation and provide a tax decrease at legislative discretion — in essence, the plan will slow or stifle energy exploration, pick winners and losers again, and fail to secure true tax reform which is necessary in Ohio,” the email states.

They urged their members to contact Kasich as well as state House and state Senate leaders along with individual representatives in the state Legislature.

The National Taxpayers Union, the largest and oldest taxpayer advocacy group in the nation, in a June letter to the governor, cautioned against any plan that reduces income taxes “at the expense of levying punitive tax increases on targeted businesses.”

It cites the expected increased tax revenue from the growth of the industry alone as a potential boon to Ohio and argues that “modest spending restraint in recent years” would have accomplished Kasich’s goal of an income tax reduction.

“There is a better, more fiscally responsible way to achieve income tax cuts: trimming back wasteful spending to reduce the burden of government,” the letter states. “In 1990, general fund expenditures for Ohio stood at just under $11.6 billion. By 2009, they had grown to roughly $27 billion, an increase of 131 percent. Even adjusting for inflation, Ohio’s budget swelled by a staggering 41 percent. If Ohio’s political leaders simply had restrained spending to annual inflation plus population growth over that period, Ohio’s general fund expenditures in 2009 would have been roughly $7.5 billion less. By comparison, in Fiscal Year 2010, total state and local individual income tax collections amounted to $7.88 billion. In other words, modest spending restraint in recent years could have provided enough fiscal latitude to nearly eliminate the state income tax in its entirety.”

Chambers of commerce in the state are mixed in their position on the tax so far. It has been endorsed by the Cincinnati Chamber of Commerce and Columbus Chamber of Commerce, but opposed by the Zanesville-Muskingum County, Ohio, Chamber of Commerce, Cambridge Area Chamber of Commerce Board of Directors and Noble County Chamber of Commerce.