PA Governor proposes natgas extraction tax

OREANDA-NEWS. February 12, 2015. Pennsylvania Governor Tom Wolf is proposing the state make up a shortfall in public education funding by applying a severance tax on the extraction of natural gas.

The Pennsylvania Education Reinvestment Act is modeled on a similar tax plan currently in place in West Virginia, and would enact a 5pc tax plus 4.7? per thousand cubic feet of natural gas on extraction. The governor's office estimates the tax could generate over \\$1bn in fiscal year 2017, and the state could use the funding to replace a \\$1bn cut in education funding.

The proposal would include exemptions for gas given away for free, gas from low producing wells and wells brought back into production after not having produced marketable quantities of gas. It will also contain provisions to protect property owners who lease land for natural gas exploration.

But the natural gas industry already pays "significant" taxes in Pennsylvania, Marcellus Shale Coalition president David Spigelmyer said. Pennsylvanians have also realized more than \\$700mn in royalties from energy development on public lands.

Adding a 5pc tax is going to "reduce capital spending and hit the supply chain, especially Pennsylvania-based small and mid-sized businesses, as well as our region's labor and building trades," Spigelmyer said.

But Pennsylvania is currently the only major gas producing state in the country that does not charge a tax on oil and natural gas extraction, Governor Wolf's policy memorandum sent to legislators said.

"If states like Texas, West Virginia and Oklahoma are able to charge a severance tax to fund key priorities, it is long past time Pennsylvania does too," the memorandum said.

tlh/tdf


Send comments to feedback@argusmedia.com

Request more information about Argus' energy and commodity news, data and analysis services.

Copyright © 2015 Argus Media Ltd - www.argusmedia.com - All rights reserved.