The Impact Fee Debate, Previewed

  • Scott Detrow

The debate over whether or not to impose an impact fee on natural gas drillers will likely dominate the state Capitol, when lawmakers return to Harrisburg next month.
We’re already halfway through August, so the AP has this handy “back to school primer” on what to expect when the fall session begins:

HARRISBURG — The subject of fairness — always a question in tax policy — inevitably will surface as part of the debate when the Legislature tries again this fall to impose a levy on Pennsylvania’s booming natural gas industry.
Natural gas producers don’t pay a tax on production in Pennsylvania, although they do in every other major gas-producing state. The coal industry in Pennsylvania pays a property tax based on production value to counties, municipalities and school districts — as well as a federal severance tax.
For now, Pennsylvania has one of the lowest tax burdens in the country for the industry, which is spending billions of dollars to tap thousands of wells into the Marcellus shale formation, considered the nation’s largest natural gas reservoir.
Colorado and Texas have the heaviest tax burdens, imposing a property tax on the value of oil and natural gas — generating about $2 billion a year in Texas — as a way to address the local impact of drilling. In Texas, a separate state severance tax on gas and oil raised almost as much in the 2010 fiscal year. Colorado has a conservation tax and a severance tax.

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