For the second year in a row Pennsylvania, facing a budget deficit, is contemplating a severance tax on natural gas. During the 2015 legislative session, H.B. 1743, S.B. 415, and S.B. 519 were left at a standstill after being referred to the Environmental Resources and Energy Committee. Now, two new draft proposals by Republicans for a severance tax are being looked over by the Environmental Resources and Energy Committee.
The proposal drafted by Representative Kate Harper would impose a 3.5 percent severance tax on top of per-well impact fees already being charged. Representative Harper’s bill would reportedly result in an increase in revenue of at least $200 million annually could be achieved on top of the expected impact fee proceeds of $220 million.
The proposal drafted by Representative Scott Petri imposes a 5 percent tax on the market value of gas sold and remove the impact fees already placed on the industry. The tax is estimated to gain $30 to $50 million in revenue. His proposal also includes building a pipeline to distribute gasoline from the west side of the state to the east.
Governor Wolf, who previously proposed a failed 5 percent tax last year, has suggested a 6.5 percent tax on Marcellus Shale during his budget address Feb. 9th. He estimates a revenue increase of about $218 million dollars for the 2016-2017 fiscal year.
Pennsylvania is now the only state that produces natural gas and does not impose a severance tax. Eight states rely on the severance tax as a significant portion (at least 10 percent of gross domestic product) of tax revenue. These states include Alaska, Louisiana, New Mexico, North Dakota, Oklahoma, Texas, West Virginia and Wyoming. Although the gas prices falling has resulted in a significant reduction in tax revenue from severance taxes for most of these states, some revenue is always better than none. As Governor Wolf has stated regarding the state’s budget issue, Pennsylvania could benefit from the extra revenue of a severance tax.
Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: Will Pennsylvania be able to pass a severance tax during this legislative session?
For more information about this and other state tax issues, sign up for a free trial of the Bloomberg BNA Premier State Tax Library.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)