Posted July 28, 2017
The latest severance tax proposal in Pennsylvania, targeting natural gas production as well as consumer items and services, is a story of lawmakers risking harm to ongoing energy activity and economic growth – already providing significant benefits to people all across the commonwealth – instead of working to expand opportunity through pro-growth policies.
Unfortunately, the tale being written by the state Senate could be about less natural gas production (and potentially less revenue to the commonwealth), less economic growth and fewer benefits to Pennsylvanians. We’ve likened past proposals for a severance tax to the folly of killing the goose that lays golden eggs, and this one’s no different. API-PA executive director Stephanie Catarino Wissman:
“It is a backwards approach that ignores economic reality, puts tens of thousands of good family sustaining jobs and money for groceries in peril, while jeopardizing the future prosperity of the commonwealth. The Senate’s action … makes Pennsylvania manufacturers and employers less competitive. Rather than offering proposals that could harm consumers and diminish Pennsylvania’s competitiveness, our elected officials should look at ways to promote public policies that expand Pennsylvania’s opportunity to thrive and our families to succeed.”
The state Senate’s tax hike, which had bipartisan opposition while passing on a narrow 26-24 vote, would be on top of the state’s impact fee levied on energy companies. Wissman noted that industry has paid more than $1.2 billion in impact fees since 2011:
Much of the money goes to local governments across Pennsylvania, including those in areas that aren’t natural gas producers. In the past local officials have spent these funds on public infrastructure, storm water and sewer systems, public safety, housing and more:
The state Senate’s proposal also would hike taxes on electric and telephone service, including cellphones themselves. Wissman:
“The real impact is on Pennsylvania families who could be paying much more for living in Pennsylvania if the House doesn’t reject this measure.”
The state House should say no to an anti-growth, anti-energy plan that could take Pennsylvania’s economy, energy production and the benefits that output provides in the wrong direction. State Sen. Camera Bartolotta, who voted against the measure, warned of its possible negative economic impacts …
“These tax increases will hit almost every individual and family in Pennsylvania. Too many families are already struggling to meet their own financial obligations. Demanding that they pay even higher taxes for basic necessities like electricity and heat will only make those problems worse.”
… and possible negative energy impacts:
“We should be doing everything in our power to encourage companies to come here, stay here and create family-sustaining jobs. Instead, we are threatening them with even greater tax burdens at a time when they are already leery about making new investments in our communities. These employers already pay a severance tax. We just call it an impact fee.”
Pennsylvania is endowed with the massive Marcellus shale play and its abundant natural gas reserves. Shale energy, made possible with safe and responsible hydraulic fracturing, has created jobs, lifted a number of communities from the economic depths and sent billions of dollars to state coffers, which have funded worthy projects and initiatives all over the commonwealth.
Instead of treating Pennsylvania’s energy wealth as an opportunity to raise taxes, lawmakers should concentrate on policies and actions that will encourage more energy investment and production. Wissman:
“We can continue to work together by making investments in Pennsylvania and that begins with smart energy policy so that the benefits of energy development continue to flow.”
ABOUT THE AUTHOR
Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.