PBPC Urges Shale Tax

gas drillingThe Governors of Pennsylvania, West Virginia and Ohio received letters from the Pennsylvania Budget & Policy Center today, urging them to increase their shale taxes.

Right now, West Virginia has a flat tax of 5% on natural gas extraction, and the PBPC encourages other states to use this as a minimum tax level, as opposed to a ceiling.

“A comparable tax rate will allow our states to invest in a stronger economic future,” said Sharon Ward, Director of the Pennsylvania Budget and Policy Center. “It will create consistency for the industry, ensure that our communities are benefiting, and allow our states to address the impacts of drilling.”

PBPC was joined by State Rep. Gene DiGirolamo (R-Bucks) in calling for Pennsylvania to institute an extraction tax.

“A severance tax would help us to repair the damage from years of budget cuts and help us better meet the needs of people with disabilities, public schools, and our environment,” said DiGirolamo, who spoke on a press call hosted by the policy groups today.

While Pennsylvania has slightly higher corporate income taxes, but many of the Democratic gubernatorial candidates are calling for an increased extraction tax.

PBPC is a left-leaning think tank, and unsurprisingly its right-leaning counterpart, the Commonwealth Foundation disagrees with its findings.

“Tax advocates ignore the big picture. Drilling companies pay either the highest Corporate Net Income Tax in the world or the Personal Income Tax, plus the Capital Stock and Franchise Tax, leasing fees, and royalties on top of the impact fee. Altogether it costs about $1 million more to drill in Pennsylvania than Texas, in fact, many southern states don’t even have a corporate income tax,” Elizabeth Stelle, Senior Policy Analyst at the Commonwealth Foundation told PoliticsPA.

“Contrary to claims by tax advocates, the impact fee is discouraging development in Pennsylvania. Talisman and Anadarko plugged dozens of wells to avoid paying an impact fee. These missed opportunities translate into fewer royalties for local landowners and less work for the many small businesses, like trucking companies, that benefit from well construction.  It’s clear, the natural gas industry is paying its fair share.”

2 Responses

  1. Wow, HERB, that sure seems like a lot of taxes when you list them out. Maybe we should just get rid of all taxes and anyone with guns, money, and power can be awesome, and all the poor, unprivileged people can be taken in as peasants to work their fields or in their shops and houses – 100 percent employment! It would be a Republican Libertarian Utopia!

  2. Natural Gas Facts

    1 They create jobs and pay workers that pay income tax
    2 They pay registration fees for vehicles
    3 They pay a motor fuels tax
    4 They pay for a permit to withdraw water from water sources
    5 They pay gas well storm water permit for well pads
    6 They pay a well bore permit
    7 They pay a well permit for each well drilled from the main bore. Can be as many as 12
    18 They pay a landowner lease
    19 They pay a landowner royalty
    20 They pay a Corporation tax
    21 They pay a tax on profit to the state
    22 They pay a tax on profit to the Fed Govt
    23 The landowners pay state tax on royalties
    24 The landowners pay Fed tax on the royalty
    25 They repair the roads they use. Something the state gets 44 cents a gallon for but spends on other than roads and bridges.
    26 The natural gas buyer pays a tax
    27 They pay for permits and right of way for pipelines to get gas to market.
    28 Have I missed anything. Thats already 27 fees the natural gas industry pays
    29 Now they have an extraction tax and impact fees these 2 will be 28 and 29 fees the industry and landowners pay.
    30 I forgot this one silly me. If your land is Clean and Green and the gas company drills a well or uses some of your Clean and Green acres. The used acreage is no longer Clean and Green and is now taxable as non Clean and Green. And if my memory is good the tax on that used acreage is payable by the land owner for the last 7 years that the land owner received a tax discount on that land for Clean and Green even though it was clean and green for that 7 years. There was talk about doing away with that but I am not sure if it passed
    31 The land owner pays a tax on the lease money to the state.
    32 The land owner pays a tax on the lease money to the Federal Government.
    What will they think of next.

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