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PA’s New Gas Tax is Hotly Debated – Lt. Gov. Jim Cawley

by Kenneth E. DuBose on August 8, 2011

A Pennsylvania gas tax in the form of a severance tax or fee charged to oil & gas companies seems all but guaranteed for the. Industry lobbyist have largely supported certain levels of taxes, but many in the debate have fallen short of comparing overal taxes state by state. The Lieutenant Governor Jim Cawley recently submtted an op-ed that shares his opinion on the issue. He also chaired Governor Corbett’s Marcellus Shale Advisory Committee. The best thing to take away is that you can’t compare apples and oranges.

It doesn’t matter what the Texas severance tax is when the state doesn’t levy an income tax and its franchise tax is relatively small. Pennsylvania has the highest corporate tax rates in the country, which means the oil & gas industry is already paying a decent share. Pennsylvania levies a corporate income tax, a franchis tax, and a capital stock tax. While many companies are in support of certain increases in taxes, it will be interesting to see if the answer from the state is a “fee”, a “severance tax”, or both.

The new and growing natural gas industry – working to develop the Marcellus Shale – is a vibrant industry that is transforming our economy, creating jobs, and lowering the cost of energy. (The use of cleaner-burning natural gas will have the added benefit of improving our air quality.)

So why are critics of this industry so focused on creating new, punitive taxes on it?

The constant drumbeat for the imposition of a so-called severance tax is completely misguided. Having just completed my work as chairman of Gov. Corbett’s Marcellus Shale Advisory Commission, allow me to point out a few facts.

First, calls for a severance tax imply that these businesses are not already paying taxes. Not true. Since 2006, this industry has paid almost $1.1 billion in taxes – and counting. In just the first six months of 2011, more than $292 million in taxes have been paid, more than the industry paid in all of 2010.

That revenue is in addition to more than $214 million in income taxes paid by natural gas employees and landowners leasing their land to gas companies.

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