In his efforts to raise nearly $5 billion in new state spending, Gov. Tom Wolf has proposed that the natural gas companies that comprise Pennsylvania's fastest-growing energy industry pay an additional tax to the Commonwealth. His plan calls for a 5 percent severance tax, along with a 4.7 cent fee for every 1,000 cubic feet of gas that's drilled.
The fact is that Pennsylvania already has a tax in place. It's called the impact fee, and it was passed through Act 13 of 2012 – the state's comprehensive Marcellus Shale oversight law. Since Act 13 became law, more than $630 million has been generated through the impact tax which equates to approximately a 3 to 4 percent severance tax. This very competitive rate has encouraged natural gas companies to invest in Pennsylvania, making the Keystone State a hotbed of shale activity and creating thousands of good paying, family sustaining jobs in the core, ancillary and supply chain industries.
Impact tax revenues also filter directly into all 67 Pennsylvania counties, allowing local governments to make critical investments in key infrastructure and general improvement projects. The interactive map below illustrates just how important impact tax funding has become to rebuilding local communities across the Commonwealth.
Unfortunately, impact tax revenue at the local level would be capped under Governor Wolf's plan and the additional money would go right into a General Fund for Harrisburg lawmakers to spend how they see fit. To make matters worse, the governor's severance tax proposal ignores the market price of natural gas by setting a $2.97 cent tax floor. This would increase the effective rate of the 5 percent tax, and would turn Pennsylvania from an attractive place for industry growth into one of the LEAST competitive states in the shale play.
To prevent the inevitable job loss and decline in economic growth that would result from such a move, the PA Chamber is working to keep the impact tax in place. Visit www.stopnewenegytaxes.com to learn more and take action against Governor Wolf's severance tax proposal! Read our coalition letter here.