If at first you don’t succeed, try, try again.
Pennsylvania Gov. Tom Wolf has once again proposed a severance tax on natural gas drilling, this time to pay for “Restore Pennsylvania”, a $4.5 billion infrastructure plan.
The thing is, Pennsylvania already taxes natural gas extraction. The state imposes what is called in impact fee on gas installations which is already used for state expenditures. A severance tax is a double tax, and any claims that the natural gas industry is avoiding taxes is a lie.
This is not the first time he has called for such a tax. In 2014, Gov. Wolf called for a severance tax designed to help balance budgets, or pay for the growth of benefit programs when the state was in a bad place financially. He has called for severance taxes every year he has been in office, however these proposals have not been considered by the Republican-controlled Legislature.
Gov. Wolf is now using “infrastructure” as an excuse to implement this long-desired severance tax. His proposal, which should be appearing in the form of a bill soon, calls for borrowing the $4.5 billion needed for the projects immediately, and paying off the debt over a 20-year time period using revenue from the severance tax.
David Spigelmyer, president of the Marcellus Shale Coalition, said the following about Gov. Wolf’s proposal:
“Pennsylvania’s tax on natural gas – the impact fee – generates hundreds of millions of dollars annually for critical infrastructure programs across the entire Commonwealth. This existing annual tax revenue, when combined with other business taxes paid by the industry as well as lease bonuses and royalties tied to natural gas development on state land, has provided nearly $5 billion in revenue since unconventional shale gas development began.”
Pennsylvania’s existing impact fee achieves the same goal severance taxes set out to do in other states. Adding a severance tax on top of the impact fee would create a massive burden on the natural gas industry in Pennsylvania, making it a very unattractive state for future development.
Natural gas has been a boon to Pennsylvania, not just economically, but it has lowered carbon emissions. The state produces 20 percent of the natural gas in the United States, and Pennsylvania’s carbon emissions have gone down by 30 percent as natural gas use has grown in recent years.
It makes no sense to risk this progress with a double tax.
When asked if he would consider any other methods of funding for his proposal, Gov. Wolf stated he was open to other proposals, but was skeptical they would be able to raise the revenue needed for his project. “If you have another way of raising $4.5 billion, that are going to be dollars directed toward doing things that the people of Pennsylvania really need to make their lives better, I’m all ears”, he said.
Gov. Wolf’s severance tax has been defeated before, and it must be defeated again.