Cawley Blasts Severance Tax In Philly.com Livechat

  • Scott Detrow

Scott Detrow / StateImpact Pennsylvania

Jim Cawley presides over a Marcellus Shale Advisory Commission meeting


Lieutenant Governor Jim Cawley’s stance on taxing natural gas drillers hasn’t changed within the past 24 hours, in case you were wondering.
A day after arguing against a severance tax on natural gas drilling, Lieutenant Governor Jim Cawley dismissed suggestions the levy would have helped bridge Pennsylvania’s $4.2 billion deficit.
“Last year, the legislature considered a severance tax,” Cawley wrote during a Philly.com livechat.  “Had it passed, it would have been one of the most aggressive severance taxes in the nation. It is widely believed that this tax would have raised $200 Million dollars this fiscal year. You have just solved the ‘.2’ of our ‘4.2’ problem.”
Cawley was referring to a 39-cent per thousand cubic meter tax that passed the Democratic-controlled House in September 2010. At the time of the vote, lawmakers claimed the bill would raise more than $300 million in the 2011-2012 fiscal year.
The Republican went on to defend this year’s budget, which cut more than $1 billion from 2010-2011 spending levels. “The [unfortunate] reality is that for some time Harrisburg has been spending money it just doesn’t have. Tough decisions were needed to restore fiscal [responsibility] and put PA back on the track toward economic prosperity.”

The chat was hosted on Philly.com, but Cawley, not Inquirer staffers, determined which questions to answer. Spokesman Chad Saylor said about 80 people took part in the session, which lasted more than an hour. At the end, Cawley invited people to email him with additional commends or inquiries, if their questions hadn’t been answered.
Update 6:10 PM: Website spokesman Mark Block says it’s “standard procedure” at Philly.com to let chat session subjects screen their own questions. “We do let the person being interviewed see all of the questions that come in from the readers,” he explained.
Most Democrats and a handful of moderate Republicans have spent several years pushing for a broad severance tax delivering money to the state government. Governor Corbett’s anti-tax pledge and the GOP’s large House majority have made a severance tax politically unrealistic, but the issue continues to play a major role in the debate over how to regulate gas drilling in Pennsylvania.  Since the GOP re-took control in January, a narrow impact fee delivering money to municipalities and counties hosting drilling has been viewed as a much more likely law.
Nevertheless, Cawley blasted the tax in a Sunday Inquirer editorial, and followed up this afternoon. Responding to a question about a tax being “in the best interest” of the commonwealth, Cawley wrote, “[W]e ARE taxing the industry – to the tune of $1.2 Billion over the last few years. This revenue goes to fund your schools, your parks and your roads, to name a few. If you consider the tax structure of other states vs. Pennsylvania’s, I invite you to do so, what you will find is that PA has one of the highest corporate net income taxes in the country and is one of the few states that charges the net income tax AND a capital stock and [franchise] tax. The industry IS paying taxes.”
Democratic Senator Daylin Leach was frustrated by Cawley’s editorial and chat. In an interview, he dismissed the argument that corporate taxes and indirect sales tax revenue generated by the drilling boom is filling Pennsylvania’s coffers. “If local drillers need to buy paper towels and pay six percent sales tax, that’s not sufficient,” he said. “They are doing something unique. They are taking resources permanently, out of our ground.” Those resources, Leach said, “belong to the people of Pennsylvania.”
Leach hasn’t given up hope for a broader severance tax, even though he concedes it’s not “politically possible” given Corbett’s veto threat. He complained Cawley and other Republican tax opponents oversimplify their opposition to new taxes. “’Taxes bad.’ It’s almost like ‘Tarzan/Jane.’ That level of sophistication,” he said. “Not, ‘maybe with taxes we can make schools better? Do something for…transportation needs?”

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