October 12, 2010
In late September, the Pennsylvania House of Representatives approved legislation to enact a severance tax on natural gas in the Marcellus Shale. Recently, the details of a state Senate Republican tax plan were made public. The Pennsylvania Budget and Policy Center has put together the following table comparing details of the two plans.
| HOUSE PLAN (SB 1155, PN 2232) |
SENATE REPUBLICAN PLAN (No bill number) |
TAX RATE:
- Thirty-nine (39) cents per thousand cubic feet (MCF) of natural gas (adjusted annually based on 7% of the NYMEX Henry Hub price)
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TAX RATE:
- Fifty mills (5%) on the market value (less deductions) of natural gas severed from an unconventional gas well
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EXEMPTIONS FROM TAX:
- Stripper wells (wells producing 60 MCF per day or less)
- Gas severed and used by a manufacturer of tangible personal property
- Gas provided free of charge for consumption of the surface owner
- Coal bed methane specifically excluded from definition of natural gas
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EXEMPTIONS FROM TAX:
- Stripper wells (wells producing 90 MCF per day or less)
- Gas severed, sold and delivered at or within five miles of the producing site for the processing or manufacturer of tangible personal property
- Gas provided free of charge for consumption of the surface owner
- Gas collected from coal bed methane well
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DEDUCTIONS FROM TAX:
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DEDUCTIONS FROM TAX:
- Costs of dehydrating, treating, compressing and delivering gas to first purchaser may be deducted from the market value of gas subject to tax
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TAX RATE CREDITS:
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TAX RATE CREDITS:
- Credit of 35 mills (3.5%) for gas taken in the first 60 months (5 years) from an unconventional well
- Credit of 40 mills (4%) for natural gas taken from a marginal well (producing 150 MCF per day or less)
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DISTRIBUTION OF TAX:
- First $75 million to General Fund in 2010-11 to 2012-13, remainder distributed as follows:
- 40% to General Fund
- 32% to Environmental Stewardship Fund
- 16% to Local Government Services Account
- 12% to other environmental-related programs
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DISTRIBUTION OF TAX:
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JOB CREATION INCENTIVES:
- Marcellus Shale Job Creation Tax Credit ($1,000 per job for up to five years - capped at $10 million) applicable against PIT, CNIT, or CSFT liabilities
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JOB CREATION INCENTIVES:
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