Revised data good case for severance tax

republicanherald.com/opinion/revised-data-good-case-for-severance-tax-1.1242950
Published: December 12, 2011

In its diligent effort to prevent the natural gas industry from paying a fair tax on the wealth it extracts from Pennsylvania, the Corbett administration often has overstated the positive impact of the industry.

State agencies have overstated job creation and nonseverance tax revenue attributable to the industry as Gov. Tom Corbett unconvincingly has argued against a severance tax.

At one point, the Department of Revenue attributed to the industry millions of dollars in tax payments collected from individual taxpayers who work in drilling and related fields.

Now, the Department of Revenue has acknowledged that it overestimated, by more than 100 percent, the amount of income tax revenue collected from Pennsylvania property owners who receive royalty payments on gas leases.

The Department recently reported that it had received $46.2 million in such payments, 122 percent less than the $102.7 million it had projected.

That, of course, is $46.2 million to the good. But it also illustrates that the administration is willing to accept whatever Marcellus activity happens to generate, rather than ensuring that gas wealth extraction fairly contributes to the government.

Competing bills in the Legislature establish local impact fees that could be implemented by counties that  host gas drilling. But the aggregate revenue to be generated by those fees would be far less than amounts generated through severance taxes on the books in every other gas-drilling state. That is all the more true since the gas industry here also gets a pass on local property taxes that most other states assess on the value of properties that produce gas.

There is no doubt that the gas industry has had a positive economic impact on Pennsylvania. The industry and its impact also are likely to grow.

That is for the most fundamental reason of all. It’s not because of the Corbett administration allowing the industry to export as profit as much of the wealth that it possibly can. It’s because the gas is here.

Lawmakers should stop dithering and establish a fair severance tax that puts state revenue on par with that of other states that host the industry.