April 02, 2001 - Columbus, Ohio
- New Utility Tax Structure Taking Shape
Ohio Tax Commissioner Thomas M. Zaino today released the
findings of a project recalculating the value of tangible
personal property owned by electric and natural gas companies
in the state. The project was prompted by legislation
deregulating the electric (Senate Bill 3) and natural gas
(Senate Bill 287) industries.
Commissioner Zaino said the findings clearly show the
upcoming drop in property taxes paid by the utilities, but
said there will be no impact on funding for schools and local
governments. "This legislation fundamentally restructures a
big part of our business tax system, but, at the same time,
provides critical protection for schools and local
governments. They will see no drop in revenue because the
state will reimburse them for the lower property values."
Zaino says Department of Taxation (ODT) figures show the new
tax system cutting the taxable value of utility property by
about $4.45 billion -- $3.25 billion for electric and $1.2
billion for natural gas. The exact tax loss hasn't been
calculated yet but is estimated at $300 million.
To compensate schools and local government for the loss in
property taxes, the state will use revenue from two new taxes
on electric and gas distribution companies. The new
kilowatt-hour (kWh) and Mcf (1,000 cubic feet) taxes are
levied on the amount of electricity or gas delivered to
customers. Revenue raised under the old and new tax systems
is roughly equivalent.
Those taxes are part of a package that includes tax rate cuts
on all natural gas property from 88- to 25-percent and
electric generating property from 100- to 25-percent. Those
cuts are designed to allow formerly regulated companies to
operate in deregulated, competitive markets. The lower rate
on most utility property is now the same rate (25%) as all
other businesses pay.
The ODT figures will be sent (certified) to the Ohio
Department of Education for use in the school funding
formula. Actual reimbursements of schools and local
governments begin in February 2002.
For more information contact:
Gary Gudmundson, Communications Director
Ohio Department of Taxation