Pennsylvania

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A shale gas drilling rig in Washington, Pa.

Severance tax

Background

Pennsylvania is the only major gas-producing state in the U.S. that does not have a severance tax. This has been a major sticking point in Harrisburg for nearly a decade.

Instead, Pennsylvania has a unique “impact fee.” Gas companies pay the fee for each well they drill. In the first year of a well’s life, it can range from about $40,000 to $60,000, depending on the price of gas. A severance tax, on the other hand, would be paid based on how much gas is produced, when drillers “sever” the resource from the earth.

Former Governor Tom Corbett signed the impact fee into law in 2012. Since then the fees have raised over a billion dollars. Corbett, a Republican, was against a severance tax. He often touted the fact that most of the money raised by the impact fees was sent right back to communities where drilling occurs–helping to cut local taxes, improve roads, and emergency responsiveness.

Supporters of a severance tax argue Pennsylvania is leaving money on the table and could be getting more revenue from a severance tax. Since 2013, the amount of money raised by the impact fees has declined, even as gas production has climbed.

Current Democratic Governor Tom Wolf has pushed aggressively to enact a severance tax, but he’s been met with opposition by the Republican-controlled legislature, who say it will hurt jobs and the growth of the gas industry.

 

Latest Posts

Severance tax could be close, but it doesn’t mean what it used to

Pennsylvania is the only major gas-producing state in the country without a severance tax. It’s been a hot topic in Harrisburg for nearly a decade. Now, as the year winds down, Democratic Governor Tom Wolf and Republican legislators look like they might get a deal done on a modest severance tax. Capitol Reporter Katie Meyer and [...]

Lawmaker: Natural gas lobby too influential in severance tax debate

A Democratic lawmaker from Delaware County says the current debate over the severance tax is unduly influenced by the natural gas industry, which has spent millions lobbying lawmakers. With more than 200 gas industry lobbyists registered in Harrisburg, State Rep. Greg Vitali says the industry has spent $3.7 million on lobbying the Capitol this year [...]

House begins debating natural gas severance tax

(Harrisburg) — House lawmakers have begun moving a natural gas severance tax through their chamber. It’s major priority for Democrats, who have been trying unsuccessfully to pass one for a decade. But it’s slow going–the bill is saddled with well over 300 amendments. Along with Democrats, the tax is championed by a coalition of moderate, [...]

House assigns blame as budget talks crash; Wolf draws “line in the sand”

The latest push to finish Pennsylvania’s late, unbalanced budget has melted down. After several false starts, talks between House Democrats and Republicans dissolved into fights Wednesday over who’s at fault for the chamber’s inability to find consensus on a tax package. Meanwhile Governor Tom Wolf declared himself “done” playing games, and unexpectedly announced he’ll balance [...]

Controversy over Wagner’s severance tax remarks

A state senator running for the GOP gubernatorial nomination next year has been urging fellow Republicans not to support a natural gas severance tax–in part because he thinks it would help Democratic Governor Tom Wolf politically. Senator Scott Wagner’s remarks on the subject were recorded secretly by a campaign tracker. They don’t constitute an ethics [...]

Gas severance tax won’t have big impact in Pennsylvania, says researcher

A natural gas severance tax has been a hot-button issue in Harrisburg for nearly a decade, but the plan recently approved by the state Senate is unlikely to have a major impact–  either in terms of government revenue, or drilling company investment decisions, according to a researcher from the nonpartisan environmental economic think tank, Resources for [...]

Business groups slam energy tax proposal

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 [...]

After years of debate, severance tax saga continues

Pennsylvania remains the only major gas-producing state in the country without a severance tax. This fact has been a major sticking point in Harrisburg– for a really long time. Now state lawmakers are once again looking to place new taxes on natural gas drillers. A gas severance tax the Senate approved this week is expected to bring [...]

Wolf renews call for natural gas tax

Governor Tom Wolf is renewing his call for a severance tax on Pennsylvania’s natural gas industry. It was among his central campaign pledges three years ago, but so far he’s been unsuccessful getting it through the Republican-led legislature. In his annual budget address Tuesday, Wolf didn’t mention the tax at all– instead focusing on efforts [...]

A new year, a new round of gas severance tax proposals

State lawmakers are back in Harrisburg this week, and not surprisingly, they’re looking at levying new taxes on Marcellus Shale natural gas drillers. As StateImpact Pennsylvania has previously reported, this tax has been debated for years, as lawmakers of both political parties have looked to the gas industry to help alleviate the state’s fiscal woes. This [...]

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