Pennsylvania House panel suggests 'highest shale tax in U.S.'
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HARRISBURG -- A key House committee approved a Marcellus Shale extraction gas tax with a significant tax rate Monday, causing a Wexford-based industry group to say it is "stunned" that legislators want to give Pennsylvania the highest tax rate for shale gas in the nation.
The House Appropriations Committee voted to approve the gas extraction tax, with most Democrats in favor and all Republicans opposed. It would impose a levy of 39 cents per thousand cubic feet (MCF) of gas extracted. Legislators hope to generate at least $200 million, which would be split among the state's general fund, localities with Marcellus drilling and environmental costs.
The proposed tax could come up for discussion in the House as early as today, with a vote perhaps this week. It would still have to be approved by the Senate, which is controlled by Republicans, who are unlikely to approve the tax in its present form. They favor a tax more like the one in Arkansas, at 1.5 percent of the dollar value of gas extracted.
Friday is looming as the Legislature's self-imposed deadline for enacting a shale gas tax. Proponents of the tax say Pennsylvania is the only shale gas state without such a tax, but gas industry officials say the tax shouldn't be so large and noncompetitive that it would drive gas drillers to other states.
Especially unhappy is the Pennsylvania Independent Oil and Gas Association, based in Wexford. Its president, Louis D'Amico, wrote to all legislators Monday saying his group is opposed to the latest tax proposal, which would give Pennsylvania "the highest tax rate in the nation."
He said association members "are unified in opposition to a severance tax and are stunned that House leaders somehow believe a 39-cent per MCF will benefit Pennsylvania." He claimed it would "drive investment to other states with more predictable regulatory structures and hurt the economic growth" the state has seen.
He called on legislators to develop policies that "realize the long-term value of private investment over short-term revenue grabs from a severance tax."
But Democrats said the gas-drilling industry has vast resources, is investing millions of dollars in Pennsylvania and can afford a tax on Marcellus Shale extraction.
First Published September 28, 2010 12:00 am
