Republican Pileggi proposes severance tax to help seniors
http://citizensvoice.com/news/drilling/republican-pileggi-proposes-severance-tax-to-help-seniors-1.1156511#axzz1OVCl9M3c
By Robert Swift (Harrisburg Bureau Chief)
Published: June 3, 2011
HARRISBURG – A Senate Republican leader wants to levy a state Marcellus Shale severance tax as a way to pay for a freeze on school property taxes for senior citizens.
Majority Leader Dominic Pileggi, R-Chester, sent a memo to colleagues seeking support for a “reasonable and competitive” severance tax to generate about $250 million annually for tax relief targeted for individuals 65 and older who have qualified for a homestead exemption for at least five years.
“The tax burden would be shifted from seniors, many of whom are struggling to stay in their homes on a fixed income, to companies involved in natural gas drilling in Pennsylvania,” said Pileggi.
Pileggi has yet to introduce his bill. The senator said the tax will be based on an as of yet unspecified fixed rate applied to both the volume and price of gas.
He considers the proposal revenue neutral since all severance tax revenue would go to a dedicated fund to reimburse school districts for revenue lost due to the tax freeze.
This is a telling point in light of a flap over whether the drilling impact fee legislation sponsored by Pileggi’s colleague, Senate President Pro Tempore Joseph Scarnati, R-Jefferson County, is a tax increase or not.
Grover Norquist, the head of Americans for Tax Reform, wrote to senators last week saying the impact fee bill is a tax increase. As a result, he said, any state lawmaker who signed ATR’s anti-tax hike pledge would be violating that pledge if they voted for the impact fee bill.
The ATR pledge contains a provision that a tax increase is acceptable if directly offset by a tax cut of equal size so it becomes revenue neutral. Scarnati countered that his impact fee bill doesn’t increase taxes and will be offset anyway by several state business tax cuts.
Pileggi said he supports Scarnati’s plan to use impact fee revenue to cover the costs of the impact of gas drilling on the environment and local governments.
Another GOP lawmaker, Rep. Nick Miccarelli, R-Ridley Park, said this week he will introduce a severance tax bill to pay for a cut in the state personal income tax.
Pileggi is the most prominent GOP lawmaker yet to call for a severance tax, but Republican Gov. Tom Corbett is steadfast in opposition to the idea. These new severance tax bills are an attempt to give political cover to state lawmakers who signed the ATR pledge, said Jan Jarrett, president of PennFuture, an environmental group. Jarrett said the bills help advance the debate over a severance tax, but won’t get her group’s support because they don’t help the environment and local communities.
“You really need to structure a tax in a way to address the extra costs that drilling imposes on the environment and communities,” she added.