Via Philadelphia Business Journal

Pennsylvania gets smaller share of tax revenue from oil and gas extraction than Texas, Alaska

Less than 1 percent of Pennsylvania’s tax revenue comes from taxes and fees generated directly from the extraction of oil and natural gas, according to a new report.

The Keystone State is the second-biggest natural gas producer in the U.S. but the wellhead fee isn’t as big a percentage of overall taxes collected in 2014 compared to other states like Alaska, North Dakota and Wyoming, according a report this week by the Energy Information Administration.

Pennsylvania’s annual wellhead fee is imposed on the number of wellheads drilled and is also based on the price of natural gas. But, as EIA noted, the impact fee growth was smaller than could be expected from the production growth because a lot of the growth is due to hydraulic fracturing getting more out of each well.

That less than 1 percent of tax revenue collected is small compared to Alaska, where 72 percent of the state’s tax revenue comes from a severance tax on oil and natural gas, and North Dakota, where it’s 54 percent. Wyoming gets 39 percent of its tax revenue from severance taxes and Texas, the other state in the EIA study, gets 11 percent.

Even with a potential severance tax in Pennsylvania — as proposed by Gov. Tom Wolf and resisted by the GOP-led Legislature — Pennsylvania’s tax revenue percent from extraction won’t jump by leaps and bounds.

“The proposed 5 percent severance tax is estimated to generate up to $1 billion in tax receipts, this amount would still be less than 3 percent of the state’s total tax collections because of Pennsylvania’s reliance on other sources of tax revenues,” according to the EIA.

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