Pennsylvania

Energy. Environment. Economy.

Business groups slam energy tax proposal

A coalition of seven business trade groups is criticizing new energy tax legislation.

Lindsay Lazarski/WHYY

A coalition of seven business trade groups is criticizing new energy tax legislation.

A coalition of Pennsylvania business groups is pushing back against legislation that would raise energy taxes.

A bill approved last month by the Republican-controlled state Senate imposes a new severance tax on natural gas production, and a new gross receipts tax on natural gas consumers.  On Tuesday a coalition of seven business and energy trade groups held a conference call with reporters to denounce the measure, which is now before the House.

“If this Senate proposal is enacted, natural gas will be taxed at four different points,” says Pennsylvania Chamber of Business and Industry President Gene Barr. “With an impact fee– or impact tax– at the drilling, with an extraction severance tax when that product is taken out of the ground. The third point will be when it’s utilized by the end-user– either residential, commercial, or industrial. If you’re a company in the natural gas business and you happen to make money after all this, then that income will be taxed as well.”

Aside from the Chamber, the coalition includes the Energy Association of Pennsylvania, Pennsylvania Manufacturers Association, Industrial Energy Consumers of Pennsylvania, Associated Petroleum Industries of Pennsylvania, Marcellus Shale Coalition, and Pennsylvania Independent Oil and Gas Association.

The groups pointed out Pennsylvania passed a per-well impact fee (which some have taken to calling an “impact tax”) in 2012, which has brought in more than a billion dollars so far. Most of that money gets funneled back to the communities where drilling occurs.

“This industry’s paying more than its fair share and generating jobs to boot,” says Marcellus Shale Coalition President David Spigelmyer. “It’s an economic opportunity for Pennsylvania, if we don’t squander it.”

Pennsylvania is the only major gas-producing state without a severance tax on production, and that fact has become a rallying cry for critics and others who say the state should be reaping more benefits from the resource. Over the years, legislators of both parties have put forth severance tax proposals, but it’s clear this latest development is a major concern to the business groups.

Several of the oil and gas trade group representatives noted that drillers have been hammered in recent years with the low prices of natural gas.

“I”m so sick and tired of hearing the argument, ‘The industry’s here. They can afford to pay a severance tax.’” says Stephanie Catarino Wissman, of the state division of the American Petroleum Institute. “What’s affordability? No one is listening to the economic reality– the price pressures we are under as an industry. Keep in mind, capital is movable. All our companies are looking at their portfolio and looking to where to invest their dollars.”

The groups also say it has become harder to do business in Pennsylvania, due regulatory uncertainty– specifically the long delays and wait times for permit applications before the state Department of Environmental Protection.

The bill is perhaps equally as unpopular with environmental groups, because it would take away some authority from state environmental regulators, and give it to political appointees or third-party contractors.

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