Pennsylvania

Energy. Environment. Economy.

Wolf hoping third time’s the charm on severance tax

This Dec. 29, 2015, file photo shows Pennsylvania Gov. Tom Wolf speaking with members of the media at the state Capitol in Harrisburg, Pa. Governor Wolf says he plans to propose another natural gas severance tax at the end of this month.

AP Photo/Matt Rourke, File

This Dec. 29, 2015, file photo shows Pennsylvania Gov. Tom Wolf speaking with members of the media at the state Capitol in Harrisburg, Pa. Governor Wolf says he plans to propose a natural gas severance tax at the end of this month. It would be his third attempt to tax the gas industry since becoming governor.

After failing to pass a natural gas severance tax for the last two years, Governor Tom Wolf is hoping this year, the legislature will get on board with his proposal.

Following an event at the Academy of Natural Sciences in Philadelphia Tuesday evening, Wolf said he plans to ask for a tax on Marcellus Shale drillers during his 2017/2018 fiscal year budget address next month. However, he was mum on the details, which he said are still being worked out with legislators and the natural gas industry.

Wolf, who campaigned on imposing a five percent severance tax, thinks the measure is key to making sure communities hours away from the nearest gas well buy in to Marcellus Shale development, especially as pipeline companies look to move natural gas to markets on the East Coast through their backyards. Increasingly, suburban Philadelphia communities in Delaware and Chester Counties, which lie along the eastern edge of route of the proposed Mariner East pipeline, have been organizing to resist the project.

“I want to be able to say to the people in Delaware County, if you support reasonable and environmentally correct expansion of the gas industry, this is going to help your schools,” the governor said.

Last year, Wolf failed to pass a 6.5 percent severance tax at a time when natural gas production and prices were tanking.

The governor would not say how high a tax rate he’s proposing this year, but hinted at a new plan that would be sensitive to the natural gas market where prices remain low.

“It could be something that has some triggers in depending on the price of natural gas,” he said. “It’s not a matter of whether it’s going to be more or less” than previous proposals.

However, it is unclear whether that would sway Republican lawmakers hesitant to raise taxes or gas industry lobbyists, who have beaten back all previous attempts at a severance tax in the state.

In the meantime, Pennsylvania remains the only major energy-producing state not to levy a tax on extraction. Instead, drillers pay an impact fee for every well drilled. So far, these fees have brought in about $200 million a year, with most of the money going back to the counties and municipalities with the most wells.

Comments

  • http://marcellusdrilling.com Jim Willis

    “In the meantime, Pennsylvania remains the only major energy-producing state not to levy a tax on extraction.” False statement, but to be expected from propagandist outlets like StateImpact. The truth is the impact fee + corporate income taxes already levy a tax on gas that is HIGHER than that in other gas producing states like Texas.

    • Wayne

      Clearly, Mr. Willis believes it is fine to put words and concepts into a blender, then mash them up so he can make an assertion like that. This is odd for a political conservative to do, except perhaps when it suits his purpose. A fee is not considered a tax, which is why the PA Republican legislative bodies voted to install it, and Corbett signed it into law, and why the same legislative body always refused, and still refuses to enact a severance tax.

      Corporate income taxes are taxes that all corporations pay (except perhaps for any corporation associated with Mr. Trump of course). How much of that tax is actually paid to PA instead of the company’s home state might be another matter, however.

      I’m surprised Mr. Willis didn’t try to include in his corporate tax equation the taxes that the corporation’s employees may pay. Usually such false arguments do.

      • Roger Lyon

        i could care les what willis says. but greed leads to greed and the gas companies are already threatening to decrease extraction rates. so up goes tax down goes tax income. so march on and tax tax tax.

        • Wayne

          Since there is no extraction tax, the tax can’t get any lower than no tax that exists. And as I mentioned in relation to the Corporate Income Tax rate and structure, the vast majority of extraction companies are incorporated in other States. Do these states have reciprocal agreements with PA? How much corporate tax do these extraction companies actually pay to PA(if they are like Trump, they pay nothing)?

          The imposition of a severance tax will not create a decrease in extraction rates. The price for shale gas, the building of new pipelines or not, the export and expansion of markets, or not; those are the forces that will decrease, or increase the rate of extraction.

          • Guido

            Tax, fee, blah, blah. Just an exercise in semantics. Guv Wolf, for example, referred to the transportation bill as the “Corbett gasoline tax.”
            Wolf remains indebted to the teacher union that poured big bucks into his campaign. That’s what his extraction tax is all about.

          • Wayne

            Newsflash guido, Corbett signed the 40% increase in gasoline tax, passed by the Republican legislature. As far as semantics, that’s my point. The Republicans play games by charging fees, increasing fees, instead of taxes. Republicans tax the poor and middle class, lower taxes for the rich. What’s the matter with Kansas, or Kentucky for that matter?

          • Guido

            It’s not a gasoline tax, rather a surcharge on distributors that is passed on. It’s not 40 percent, more like 28 over a five year period. These monies are used for road repair and infrastructure improvement. SEPTA, the Philly area transit authority, has used these tax monies for improvement on the former Red Arrow lines.
            The transportation bill was, of course, signed by Corbett. He was guv at the time. But I remind the bill was passed with bipartisan support.
            And you may be amazed to learn the general assembly rep, where I lived, a Repub, voted against the bill.

          • Wayne

            What’s the difference? The point is, the price of gasoline was raised to where it is currently one of the highest in the Nation. Yes, PA needs to take care of its infrastructure. The legislature, and Corbett, chose to raise the funds necessary in a regressive way, that is by raising the price of gasoline, instead of an income tax based tax hike, or raising funds by installing a severance tax on shale gas extraction, for example.

          • Guido

            I don’t care what the gasoline tax is in any other state. I use Pennsylvania roads and infrastructure and have no problem in paying cents more to keep both in good and safe condition.

          • Wayne

            Oh please, first off, the roads in my neck of the woods are in terrible shape, and there is no money going to be spent on any future improvement that is listed on the DOT website. The roads are so bad, they are a mortal danger to drivers. Secondly, when you pay at the pump, everyone gets charged the same, whether the person is on SS or works at Walmart and lives on poverty wages, or is like you, who doesn’t have to worry about a 28 cents per gallon increase which at 20 gallons per week = $5.60 x 52 = a tax increase of $291.20 per year. The issue is the source of the income to pay for the infrastructure improvements, and I would much rather the shale gas extraction companies pay a severance tax, and have it come out of there. Large Corporations, especially oil and gas, get away with murder when it comes to taxes.

          • c_chandler

            seems to me PADot had stealing from their high ups recently, maybe get the top criminal dogs out.

          • Guido

            Nice try, Wayne. You’re in running for Drama King. Who writes your material? Someone from the Wolf staff?
            How do you know I don’t worry about thegas price increase? You don’t know me.
            I’ll let you in on something. I live in a county that has benefitted from impact fees and much prefer the bucks go here than the general fund.
            How do you know corporations get away with murder? Again, who writes your material? They take advantage of tax laws as I assuredly do. And if you don’t, well, you’re a dullard.

          • Wayne

            Guido, here’s your own words: “I use Pennsylvania roads and infrastructure and have no problem in paying cents more to keep both in good and safe condition.” “How do I know (you) don’t worry about the gas price increase”? By your own words in this thread, which thank God, is the only way I know you. Who is the “dullard” Guido, if you don’t even bother to know your own words?

            As for your question “How do (I) know corporations get away with murder”? Because I am a sentient being, Guido. I pay attention. Are you a serious human being? Is the corporate tax structure the same as the personal tax structure for the hundreds of millions of people who “work for a living”? Who “earn a wage”.? Not by a long shot. Are corporations “people my friend”? Are you a corporation? Or, are you one of the hundreds of millions of Americans who just work for a living, living paycheck to paycheck, and don’t have the opportunity to “take advantage of tax laws as (you) assuredly do”. Again, your own shallow, unspiritual words. How soulless are you?

            That’s a serious question.

          • Guido

            Ha Ha Ha. More from Drama King Wayne.

          • c_chandler

            w. penna should not have to pay for stupid philadelphia and stupid pittsburgh systems. the greedy wolfe is not a gov. of the people. his only goal is to increase costs and taxes. please boot himout.

      • sikologik

        So you would be fine then, with removing the impact fee and replacing it with an extraction tax? I mean, since the extraction fee isn’t a tax and whatnot.

        By the way, you would’ve done your comment a service by leaving out the bullsht about Donald Trump.

      • Russ Bragg

        Whether a fee is a tax, is a personal opinion. You can call it whatever you want.

        For some, anything imposed by a government, municipality, etc that removes money from an individual or entity is a tax.

        Politicians may prefer fees so they can say they didn’t raise taxes. Hopefully, most people will know better.

  • joe

    choke the goose ,that’s all libertards can do.

    • c_chandler

      wolfe is a libterd.

About StateImpact

StateImpact seeks to inform and engage local communities with broadcast and online news focused on how state government decisions affect your lives.
Learn More »

Economy
Education