|Posted:||January 9, 2015 02:42 PM|
|From:||Representative Mike Carroll|
|To:||All House members|
|Subject:||Severance Tax Exemption for Manufacturing Purpose|
|In the near future I intend to introduce legislation which, in the event a severance tax is imposed on the extraction of natural gas, would exclude from said tax any gas that is sold and delivered by a producer within five miles of the production site for the purpose of manufacturing or processing tangible personal property. My legislation would also exclude gas that is provided free of charge to any surface owner.
The need for a severance tax on natural gas production extracted from our Commonwealth’s Marcellus Shale reserves has never been more evident nor crucial. A severance tax can make a significant impact on our $1.5 billion budget gap and provide desperately needed funding for our schools and services. However, as with any issue of this magnitude, there are nuances and complexities which must be considered. 2014 saw a drastic fall in the price of oil and natural gas. Consequently, manufacturers can pass these savings on to the consumer by lowering their shipping and production costs. A severance tax may negate these savings for businesses which use gas extracted from their own property to fuel their production.
A healthy manufacturing sector means more jobs, growth and prosperity for our communities. Businesses that save costs by using Pennsylvania’s own natural resources rather than importing should not be overly inconvenienced by a severance tax. To this end, my legislation will essentially exempt from the tax any natural gas extracted from property owned by a manufacturer, so long as the gas is used in the course of the manufacturing process. This will allow the manufacturers to keep their costs low and products reasonably priced. It will also incentivize businesses to bring their operations, along with much-needed new jobs and additional revenue, into Pennsylvania. The loss of tax revenue from this exemption is relatively minor compared to the potential economic benefit and I am confident that this legislation will allow us to enact a severance tax that is both fair to business and beneficial to the Commonwealth.
Please join me in sponsoring this important piece of legislation.
Introduced as HB716