PBPC Applauds Gov. Wolf's Severance Tax Proposal

 

In response to Gov. Wolf’s announcement this morning of a proposed severance tax on natural gas, Michael Wood, research director of the Pennsylvania Budget and Policy Center, released the following statement:

“Enacting a severance tax on the extraction of natural gas in Pennsylvania is long overdue. We, therefore, applaud Gov. Wolf’s proposal earlier today to establish such a tax at the same rate as neighboring West Virginia’s tax.

Pennsylvania is now the second-largest producer of natural gas in the United States, and it is high time we taxed the value of this non-renewable resource as do other states.

Research shows that severance taxes have little to no impact on oil and gas production. Drilling decisions are driven primarily by expectations about prices. With or without the tax, Pennsylvania’s Marcellus Shale is one of the most cost-effective places to produce natural gas in the United States.

Moreover, as the conservative Tax Foundation has observed, natural gas taxes are often paid by out-of-state consumers. Pennsylvania consumers pay severance taxes imposed by other states but have failed to collect revenue when our Marcellus Shale gas is exported.

Investing severance tax revenue in education will help reverse the deep cuts to education spending in Pennsylvania since 2010, benefiting all Pennsylvania residents and strengthening Pennsylvania’s economic recovery.

Pennsylvania voters have resoundingly supported a common-sense severance tax on natural gas for several years. It is time to give them the reasonable tax that they want."