Corbett says public misunderstands impacts of gas tax

September 9, 2014 | 6:15 PM

At a news conference in Philadelphia, Governor Corbett said he believes the public may be misinformed about how a severance tax on natural gas would affect the drilling industry in Pennsylvania.

Republican Governor Tom Corbett said at a news conference Tuesday that the public may be misinformed about the consequences a severance tax could have on the natural gas industry in Pennsylvania.
A new poll from the University of Michigan shows a majority of residents support a tax on gas production – a measure Corbett has long opposed – and don’t believe it would force industry to leave the state. Forty-seven percent of Pennsylvanians surveyed also gave the governor a negative rating for how he’s handled gas development.
Corbett would not comment specifically on the poll, noting he had not read it, but said he believes members of the industry who have told him a tax could cut into profit margins that are already thinned by the low price of natural gas, forcing them to drill elsewhere.
“I don’t know how the people who were surveyed get their information and that’s important,” he said, “But if you talk to the industry, particularly with… the low prices they’re getting for the natural gas, they’re going to go to the state that’s the most competitive with the rigs.”

While Corbett said he agrees the industry would ultimately not leave behind natural gas reserves still locked in the Marcellus Shale, he indicated that a tax could slow down the pace of drilling and limit the economic benefits for Pennsylvania.
“The governor of Texas told me about three months ago, he said there’s a waiting list for the rigs that are in Pennsylvania in Texas,” he said. “So we have to keep ourselves competitive in other states.”
Operators in Texas pay a 7.5 percent severance tax.
Last spring, an analysis by the state’s Independent Fiscal Office found Pennsylvania has one of the lowest effective tax rates on natural gas production in the country.
The issue has become a central debate in the race for governor. Corbett’s opponent, Democratic businessman Tom Wolf has said he wants to pass a 5 percent severance tax.
The governor argues the industry already pays sales and corporate income tax, as well as an impact fee for every well drilled. The fee has brought in $630 million since 2011, with most of the money going back to communities that host the drilling.