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Rep. Harper Introduces Marcellus Shale Severance Tax Proposal
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Rep. Kate Harper (R-Montgomery) this week introduced House Bill 1406 to impose a severance tax on natural gas extraction in Pennsylvania to fund environmental programs, the local communities impacted by the drilling and education in the Commonwealth. “As we continue to experience the growth of the natural gas industry in Pennsylvania, we must ensure that the drilling is done safely, that the local communities impacted by the drilling are able to take care of their roads and water supplies, and that the drilling companies pay a fair share toward environmental programs to deal with accidents and ill effects from the fracking process,” Rep. Harper said. “Additionally, we should also be able to soften some of the education budget cuts in the governor's proposed budget.”
The revenue would go into a Natural Gas Severance Tax Account to be distributed as follows:
-- 36 percent to environmental programs, including the Environmental Stewardship Fund which funds the popular Growing Greener program, Hazardous Sites Cleanup Fund, the Fish and Boat Commission and other agencies;
-- 32 percent to the Local Government Services Account, to be further distributed to counties and municipalities affected by natural gas drilling with a portion going to the Pennsylvania Emergency Management Agency; and
-- 32 percent to the Education Supplemental Account. Two-thirds would be used to support basic education, while the remaining one-third would support community colleges and higher education in the Commonwealth.
Rep. Harper noted natural gas drilling companies pay a severance tax in virtually every other state in which drilling takes place, so enacting such a tax in Pennsylvania, as long as it is fair and competitive, will not hamper job growth related to the industry in the Commonwealth.
“Drilling in the Marcellus Shale is proving to be a real economic boon to communities in rural Pennsylvania where jobs have been scarce for many years,” Rep. Harper said. “I do not want to cripple job creation in that area. My proposal will not do that because I am proposing a modest rate for the early days of the well production, rising to a rate equal to our closest competing states later. It means, for the first time, this industry will pay its fair share.”
Rep. Harper structured her proposal using a formula similar to that of Arkansas. It would assess a tax of 1.5 percent of the gross value of units severed at the wellhead for the first 60 months of production and 5 percent of the gross value of units severed thereafter on wells that produce natural gas in excess of 90,000 cubic feet per day.
Rep. Harper can be contacted through her website.
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5/2/2011 |
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