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House of Representatives
Session of 2017 - 2018 Regular Session


Posted: July 11, 2017 10:22 AM
From: Representative Margo L. Davidson
To: All House members
Subject: Legislation Providing for a Severance Tax on the Production of Natural Gas

TO: All House Members

FROM: Representative Margo Davidson
Representative Maria Donatucci
Representative Brian Kirkland
Representative Leanne Krueger-Braneky
Representative Joanna McClinton

DATE: July 11, 2017

SUBJECT: Legislation Providing for a Severance Tax on the Production of Natural Gas

In the near future, I plan to introduce legislation that would provide for a severance tax on the production of natural gas that is comparable to our neighboring states.

Under this legislation, the severance tax would be modeled on the tax structure imposed under West Virginia’s severance tax. Specifically, the legislation would impose a severance tax with a tax rate of 5 percent on the market value of gas severed (with a floor of $2.97), with an additional rate of $0.047 cents per Mcf extracted. West Virginia has seen a boom in production and subsequently revenue from unconventional drilling over the last decade.

It should not be lost that this reasonable severance tax is just one part of growing a healthy and successful unconventional natural gas industry in Pennsylvania. In addition, a portion of the proceeds may be used to provide for a better educated citizenry.

Pennsylvania currently ranks 45th in the nation relative to the percentage of funding provided by the Commonwealth for public education. With Pennsylvania sitting on one of the largest deposits of natural gas in the world, it is up to us to use this resource wisely, so that it may benefit all Pennsylvanians. Providing funding for education may do just that and assist Pennsylvania’s schools with much needed revenue boost, providing our students with additional resources providing for great success. Pennsylvania is the only major natural gas producing state in the country that does not currently impose a severance tax.

The current Unconventional Gas Well Fee would remain intact and continue to provide for the allocations established under Act 13 of 2012.

I hope you’ll join me in co-sponsoring this important piece of legislation. For additional information please email whaigood@pahouse.net