API-PA director criticizes governor’s natural gas severance tax

API-PA Executive Director Stephanie Catarino Wissman recently expressed her disapproval of
Pennsylvania Gov. Tom Wolf’s proposed severance tax on the natural gas industry.

“Here we go again,” Wissman said. “Governor Wolf should look at ways to assist projects that expand Pennsylvania energy leadership rather than place a punitive tax on the industry that would harm consumers and tens of thousands of jobs in Pennsylvania. Rather than calling for another severance tax, we can work together help provide affordable and reliable energy needed to run households and businesses all over the commonwealth.”

Wolf tried, but was unable, to pass the tax for the last two years. Wolf is seeking a 6.5 percent severance
tax on shale gas production. His administration said the tax would bring in $293.8 million in revenue and help fix budget deficits. The current impact tax, which is charged for each well drilled, would stay in place, but gas companies could receive a tax credit for the amount they pay in fees.

“By identifying specific programs that could be working more efficiently – and others that are no longer working at all – this budget proposes reforms that, altogether, will save taxpayers more than $2 billion,” Wolf said.

Pennsylvania is the only state that imposes an impact fee, as opposed to taxing natural gas production. The impact fee is expected to bring in $174.6 million this year.

Wissman said that investing in natural gas projects would increase the revenue from impact fees and eliminate the need for an additional tax.

“Investing in pipeline projects throughout Pennsylvania would bolster the impact tax, allowing currently shut-in gas to get to market, thereby increasing tax collections,” Wissman said. “This way, all Pennsylvanians benefit by increased impact tax investments and the environmental benefits of increased natural gas usage.”