From The Pittsburgh Business Times
Gov. Tom Wolf once again called for a severance tax on natural gas and oil production in Pennsylvania.
Wolf’s 2018-19 proposed budget calls for the implementation of a severance tax of between 4 cents and 7 cents per thousand cubic feet of natural gas, depending on the price, beginning July 1. Based on a natural gas price of below $3, the tax would be 4 cents per thousand cubic feet and 5 cents per thousand cubic feet under $5. The severance tax would bring in an estimated $248.7 million to the state’s general fund for the fiscal year, according to administration estimates released Tuesday afternoon.
Natural gas producers are reaping the benefits of the state’s abundant resources but don’t have to pay a severance tax like they in Texas, Louisiana and Alaska, Wolf said during Tuesday’s budget address.
“Ask these oil and gas behemoths to pay their fair share for extracting Pennsylvania’s bountiful resources, and we can build a brighter future for Pennsylvania,” Wolf said. Wolf has tried unsuccessfully every year of his term for a severance tax, getting close last year with a proposal that passed the Pennsylvania Senate but failed in the House.
But industry groups pointed out that Pennsylvania’s natural gas industry already pay the state’s impact fee, which has provided $1.5 billion to local, county and state governments since being implemented in 2012. The Pennsylvania Public Utility Commission expects $219.4 million to be collected in impact fees from natural gas producers for 2017, the highest amount since 2014. It’s likely the impact fee would remain even if a severance tax is implemented. And, as Marcellus Shale CoalitionPresident David Spigelmyer pointed out, that doesn’t include other state business taxes paid by producers.
“Unfortunately, the governor once again is putting politics first by proposing additional energy taxes that will make hiring and investing in Pennsylvania more difficult for local job creators, small businesses and manufacturers,” Spigelmyer said.
The impact tax is fixing roads and funding infrastructure already, said Stephanie Catarino Wissman, executive director of the Associated Petroleum Industries of Pennsylvania.
“This is a tired proposal for a duplicative tax that isn’t about paying one’s fair share or filling a gap in existing revenue opportunities. The benefits that the governor seeks are already happening,” she said.
