Gas industry: Drilling tax could cripple Pa. economy

Inquirer Harrisburg Bureau ^ | December 17, 2014 | Amy Worden

[thackney]

Three days after the newly elected Senate majority leader opened the door to negotiations on a natural gas drilling tax, industry leaders reiterated their stand that such a tax would harm the state's economy.

Additional taxes would have a "crippling effect on jobs" said Stephanie Wissman, executive director of the Associated Petroleum Industries of Pennsylvania.

"It threatens to stifle energy production and the jobs that go with it," Wissman said in a conference call with reporters Tuesday.

The prospect of a severance tax on gas production in the lucrative Marcellus Shale - an issue dormant since Gov. Ed Rendell left office in 2011 - reemerged this year when gubernatorial candidate Tom Wolf campaigned on a platform to use the tax to pump as much as $1 billion into public schools.

Wolf, who takes office next month, has vowed to move forward with a 5 percent tax on extracted gas. That would replace the current "impact fee" assessed on each well - which has generated $630 million, mostly for the towns and counties where drilling occurs - even as GOP leaders who control both chambers in the General Assembly have resisted additional taxes.

With an anticipated $2.2 billion deficit looming next year...

[thackney]

When the oil/gas drilling companies are trying to decide which areas they can afford to keep pursuing, and which areas to save for later, they mistakenly believe choking the golden goose will produce more eggs.

[Texas Eagle]

Somebody in gummint oughta look up the word "tax" some day in the dictionary.

They might be surprised it means things like, "choke", "throttle", "restrict", "burden", etc.

Only in Obonics does the word "tax" mean anything positive.

[EagleUSA]

Meanwhile, the United States continues to strangle itself with the world’s worst business taxation.....with zero regard for the consequences of same...

[Pietro]

What's driving this is envy.

The people that aren't directly making money from the gas boom feel they are being cheated, and they want their's damn it.

So what if it kills future drilling.

[Vigilanteman]

But Wolfie promised to give the schools all the money ObaMao gave them during Porkulus and he won!

I noticed our local high school still manages to pay a football coach an two assistants benefits and salary packages of over $100K each for a 3-10 record, but "saved money" by eliminating a popular foreign language program run by a teacher who earns less than $50K, but she kept her job because she teaches another less popular foreign language program which they kept. I wonder what they saved. The money spent for textbooks?

[grania]

uhhhh...the drillers are under economic threat from lower prices. Wouldn’t raising that tax force more people who now have jobs that pay well on to the unemployment lines, thus worsening Pennsylvania’s economy?

[Milton Miteybad]

Three days after the newly elected Senate majority leader opened the door to negotiations on a natural gas drilling tax...

So is it really a "drilling tax"? Like...assessed on a per foot basis, perhaps? Or is it really just a common, everyday severance tax on production at the wellhead, which many states already have?

And is the author of the article really a drooling simpleton for referring to a severance tax as a "natural gas drilling tax?"

[Vigilanteman]

That would replace the current "impact fee" assessed on each well - which has generated $630 million, mostly for the towns and counties where drilling occurs . . .

IOW, the hogs who would benefit most would be the densely populated places like Philadelphia which has the most greedy schools and where no drilling happens. The places which would suffer would be cities like Washington, PA or Punxsutawney who actually need the impact fees to build and repair roads, schools and other infrastructure needed to support the growth produced by drilling.

[thackney]

Reading past the headline:

The prospect of a severance tax on gas production in the lucrative Marcellus Shale - an issue dormant since Gov. Ed Rendell left office in 2011 - reemerged this year when gubernatorial candidate Tom Wolf campaigned on a platform to use the tax to pump as much as $1 billion into public schools.

[Pietro]

Well, I live in a drilling area and my attorney told me that these additional taxes will come out of my royalties.

Royalties which are already taxed as income, but apparently that's not enough.

The people that live in the cities think the gas companies are stealing from them and getting away w/ it.

Meanwhile, Washington County is booming because of gas, but its too much to expect that the morons that live in Washington, the city, will understand that this tax will take $$ from us and send it to Philly and Pittsburgh and, most emphatically Harrisburg.

[Qwackertoo]

I think they should tax & tax some more all blue states until the bleed red.

[thackney]

Reading past the headline intro:

Sorry.

Deeper in the article, past the excerpt I was allowed:

With an anticipated $2.2 billion deficit looming next year, Senate Majority Leader Jake Corman (R., Centre) on Saturday said he was willing to discuss a severance tax if Wolf would negotiate on cutting costs in the state pension system.

[thackney]

Yes.

Most gas producing states levy a severance tax on its gas production, and those who don’t currently are thinking hard about it. Gas severance taxes are based on either the volume or value of the gas production. Royalty owners pay their pro rata share of these gas severance taxes. You’ll notice this tax burden as a deduction on your monthly royalty revenue statements.

http://www.mineralweb.com/owners-guide/leased-and-producing/royalty-taxes/gas-severance-tax/

[Pietro]

..which many states already have? Yes, its an extraction tax, which many states already have.

But what most states don't have is the existing burdensome taxes PA has;corp tax, income tax, sales tax, usage fees out the @ss, at some of the highest rates in the country.

PA is ranked 46th in business climate, w/ this tax we can make it all the way to 50th.

[privatedrive]

How ‘bout let’s tax oil that comes from OPEC and eliminate taxes on domestic oil.

[conservatism_IS_compassion]

Tax OPEC

Spot on.

[kiryandil]

Legislators with new taxes are like monkeys on a new banana tree...

[Ditto]

IOW, the hogs who would benefit most would be the densely populated places like Philadelphia which has the most greedy schools and where no drilling happens. The places which would suffer would be cities like Washington, PA or Punxsutawney who actually need the impact fees to build and repair roads, schools and other infrastructure needed to support the growth produced by drilling.

Bingo. As it stands now, the Philadelphia mob can't get their sticky fingers on the money from drilling in the Western and Central parts of the state. The tax money now stays where the drilling takes place. The Philly mob does not like that.

[Milton Miteybad]

Yeah...I saw all that. It's clearly supposed to be a severance tax, which is a tax assessed on production at the wellhead. Hence the question arises...why would the author call what is obviously a severance tax a "drilling tax?"

Just seems like an absurdly ignorant/stupid way to describe a a fairly common type of tax that really has little to do with "drilling," per se, and far more with the actual production that occurs after the conclusion of the drilling phase.