Natural gas extraction tax debated in House
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HARRISBURG -- House Democrats and Republicans wrangled for five hours Tuesday in a bitter partisan debate over whether to enact a hefty new tax on extracting natural gas from Marcellus Shale, but the issue still has a long way to go.
Democrats favored the measure, called Senate Bill 1155, while Republicans were generally opposed. It would impose a severance tax of 39 cents per thousand cubic feet (MCF) of natural gas extracted from the vast areas of underground shale in Pennsylvania. It would generate $120 million this fiscal year, $326 million next year, $408 million in 2012 and $495 million in 2013.
But even the supporters said the bill was just "a first step," with difficult negotiations expected with the Republican-controlled Senate. Many senators favor a lower tax rate, like one in Arkansas, which has a 1.5 percent tax on the market value of the extracted gas for the first several years.
The rhetoric over the bill was loud from both sides. "It's unconscionable that these gas drillers don't pay a severance tax," said Rep. Greg Vitali, D-Delaware, adding that all other 24 states with Marcellus drilling have a tax.
"These [gas] people are making tons of money, billions in gross profits," he said. "They hired a former Pennsylvania governor for $900,000 [as a lobbyist]. They gave a [Republican] candidate for governor nearly $400,000. A rate of 39 cents per MCF is fair and reasonable. They can afford it."
Rep. Barbara McIlvaine Smith, D-Chester, said, "We are the only shale state without a shale tax. People must think we have a big S on our forehead -- for stupid."
Rep. Bryan Lentz, D-Delaware, added, "If this tax is defeated, the headlines will read 'Corporations Win, People Lose.' If you vote against this bill you are doing the bidding of the gas industry, which can and should pay its fair share."
Republicans strongly disagreed, claiming such a high tax will stifle the drilling industry as it gets going in the state, providing thousands of jobs and other types of taxes to the state and localities where drilling is going on.
GOP legislators also objected that the bill was unconstitutional, because House Democrats on Monday had taken a measure on a different subject, which the Senate had already passed, and added totally new tax language to it. Republicans said that legally, revenue-raising bills must start in the House, not the Senate.
First Published September 29, 2010 12:00 am
