|Posted:||July 6, 2017 11:57 AM|
|From:||Representative Scott A. Petri|
|To:||All House members|
|Subject:||Marcellus Shale Tax Bill|
|In the near future, I will be reintroducing a Marcellus Shale Tax Bill (former HB 1536). The rate of the tax is 5.0% on the market value of natural gas. This rate was selected based upon the cost of doing business in Pennsylvania (9.99% CNI) and the cost to drill in Pennsylvania. As you may know, Pennsylvania ranks above average in the cost to drill; only Michigan and Wyoming cost more. In 2012, natural gas companies and their affiliates paid a total of $303.1 million in taxes.
The projected revenue from a 5.0% severance tax is estimated at $1.2 billion by 2019-20, compared to the $853.5 million that the current impact fee has generated over the last four years. Projections estimate that total severance tax collections in 2015-16 would equal $148.2 million, with $40.67 million in net severance tax revenues. By 2019-20, total severance tax collections would equal $725.5 million, with $505.98 million in net severance tax revenues.
My legislation does not re-enact the impact fee but has language to hold harmless the funds currently being distributed by the impact fee. The advantages of a tax are:
1. It is a tax that is based upon the product extracted and the market price.
2. An impact fee is payable commencing on drilling, not on products, and serves as a disincentive when the market price of gas is low.
My legislation distributes the funds in accordance with existing law with any additional revenue to the general fund for ultimately paying for pensions and education.
Please join me in co-sponsoring this legislation.
Introduced as HB1662