Industry, lawmakers give thumbs down to Senate gas tax proposal

July 27, 2017
The Pennsylvania Capitol building - Associated Press

Natural gas industry groups were quick to issue statements Thursday in response to the state Senate’s recommendations to raise an estimated $100 million a year by imposing a new volume tax on natural gas from the Marcellus Shale, the nation’s largest natural gas field.

“Our industry remains opposed to additional energy taxes. This proposal – which creates new and even higher energy taxes for consumers and energy producers alike in addition to the impact tax that’s generated $1.2 billion in revenue – will erode the commonwealth’s competitive advantage that can revitalize our manufacturing base and spur other critical downstream opportunities,” stated David Spigelmyer, executive director of the Marcellus Shale Coalition. “We’re also deeply concerned these new and even higher energy taxes will cost family-sustaining Pennsylvania jobs.

“As the budget process moves forward, we remain committed and focused on fostering a meaningful dialogue with lawmakers and others about common-sense policies and solutions that can help create good-paying jobs for Pennsylvanians and other important community-level benefits for families across the commonwealth,” he added.

Dan Weaver, executive director of the Pennsylvania Independent Oil & Gas Association, said the proposed taxes on production and use of natural gas would deal “a severe blow” to the positive benefits of increased energy development in the state.

“On the resource development side, the companies involved in the development of the resource are just beginning to crawl out of a severe price slump over the past two years that has resulted in significant job cuts and financial losses,” Weaver said. “Picking on any individual segment of our economy to balance the budget should offend every Pennsylvanian, but singling out one having financial troubles is mind-boggling.”

Weaver said the recommended gross receipts tax on natural gas use “is even more baffling. Lower natural gas prices in Pennsylvania over the past five years have not only reduced burner tip prices for natural gas users, but have caused massive reductions in the price of electricity across the commonwealth. Taxing the use of natural gas will reverse these benefits and hit the pocketbook of every Pennsylvanian.”

Stephanie Catarino Wissman, executive director for the Pennsylvania chapter of the American Petroleum Institute, said the Senate’s recommendation was “a political ploy targeting job creators and industry to pay more and families to take home less.”

“This punitive tax hike isn’t about paying one’s fair share or doing one’s part; the natural gas industry alone has paid over $1.2 billion in impact taxes since 2011, the bulk of which goes to local governments,” she said. “The real impact is on Pennsylvania families who could be paying much more for living in Pennsylvania if the House doesn’t reject this measure.

“It is a backwards approach that ignores economic reality, puts tens of thousands of good family-sustaining jobs and money for groceries in peril, while jeopardizing the future prosperity of the commonwealth,” Wissman said, adding that the action “makes Pennsylvania manufacturers and employers less competitive.”

State Sen. Camera Bartolotta, R-Carroll, voted against the measure, echoing the concerns of the industry in a statement.

“I appreciate the difficulty in crafting a revenue plan necessary to meet the state’s financial challenges, but this bill is the wrong approach,” Bartolotta said in a news release. “These tax increases will hit almost every individual and family in Pennsylvania. Too many families are already struggling to meet their own financial obligations. Demanding that they pay even higher taxes for basic necessities like electricity and heat will only make those problems worse.

“The additional severance tax has the potential to devastate the natural gas industry in Southwestern Pennsylvania. We should be doing everything in our power to encourage companies to come here, stay here and create family-sustaining jobs. Instead, we are threatening them with even greater tax burdens at a time when they are already leery about making new investments in our communities.

“These employers already pay a severance tax. We just call it an impact fee,” said Bartolotta. “This tax is levied in addition to the business and corporate taxes every other Pennsylvania business pays. This bill asks the industry to shoulder yet another severance tax on top of the existing severance tax – a form of triple taxation.”

If the reaction of state Rep. Rick Saccone is any indication, the Senate budget proposal might not receive a warm welcome in the state House.

Saccone, R-Elizabeth, said the package of tax increases and the borrowing of more than $1.2 billion against future tobacco settlement payments is “an absolute disaster.”

“The House GOP passed a balanced budget with no tax increases back in April, which honored the taxpayers of the state. This proposal insults them,” said Saccone. “A revenue proposal which calls for $770 million in new and increased taxes is unacceptable to the men and women who work hard and make an honest living here in Pennsylvania.”

Michael Bradwell has been business editor for the Observer-Reporter since 1995, and was named editor of The Energy Report in 2012. He joined the newspaper in 1990 as a general assignment reporter in the Greene County bureau and has also worked as a copy editor. A 1974 graduate of Pennsylvania State University with a degree in English, he began his career at the Bedford (Pa.) Gazette. Prior to joining the O-R, he served as public relations director for Old Bedford Village, account executive at two Pittsburgh public relations agencies and copywriter for the country’s largest wholesaler of mutual funds.

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