Statement: Billion Dollar Tax Break for Shell A Bad Deal for Taxpayers

HARRISBURG, PA (June 4, 2012) – PBPC Director Sharon Ward issued a statement on news that Gov. Tom Corbett wants to provide $1.7 billion worth of future tax credits to Shell Oil Co., which is planning to build an ethane cracking plant in Pennsylvania:

“Pennsylvanians should be concerned about the governor’s plan to provide a secret tax break to a company already committed to coming to the state, a tax break that does not require the company to do a single thing or create a single job.

“The plan amounts to a cash grant to the second largest company on the planet. Shell’s parent company had $20 billion in profit in 2010, up 60 percent from the year before. The question for lawmakers should be why is Pennsylvania providing any subsidy to this project at all?

Under the terms of the original agreement, Shell is building its facility in a tax free Keystone Opportunity Zone and will pay nothing in most state or local taxes. The plant’s 7,000 workers will pay, by our estimates, about $16 million annually in state income tax revenue, while the new deal will provide Shell a $66 million annual benefit above and beyond the original deal.

“The process with this tax credit stands in marked contrast to the public process used to deliberate the passage of the Keystone Opportunity Zone. That debate was public and there was an opportunity for scrutiny.

“The bidding war over Shell’s cracker plant that took place between the governors of West Virginia, Ohio and Pennsylvania has ill served taxpayers of all three states. Had Shell decided where to locate the cracker facility without tax breaks, the jobs would be available to qualified individuals of all three states. Instead, we’re paying for a plant that will cost the taxpayers much more than the benefits it will generate.

“Taxpayers thought they were getting a cracker when Shell announced its decision to locate in Pennsylvania, but in the end, all they will be left with are the crumbs.”