Severance tax will generate more revenue
The Marcellus Shale Coalition obscured the real issue about a severance tax versus an impact fee on drillers when it noted in a Dec. 7 Associated Press story that natural gas prices recently fell in Pennsylvania.
Regardless of gas prices, which will always fluctuate, a severance tax based on production will generate two-to-three times more revenue for Pennsylvania than the current impact fee in the first year.
While a 5 percent severance tax might produce $800 million in revenue next year, that’s still nearly three times the $270 million expected from the impact fee.
As the value of gas production continues to increase, that difference and the tax’s revenue will grow, reaching $1 billion within a few years.
A severance tax is a much better deal for Pennsylvania taxpayers contending with the environmental and social costs of drilling activity and a $2 billion state budget shortfall next year.
It’s time for Pennsylvania to join every other major gas-producing state and adopt a severance tax.
Sharon Ward
Harrisburg
Ward is the director of the Pennsylvania Budget and Policy Center, a think tank based in Harrisburg.