Wednesday, May 25, 2011

Does Proposed Marcellus Impact Fee Violate No Tax Pledge? Scarnati Says No

Grover Norquist, of the Washington, D.C.-based Americans for Tax Reform and the self-described opponent of all tax increases, wrote to several members of the Pennsylvania General Assembly recently charging the proposed Marcellus Shale natural gas impact fee proposed by Sen. Joe Scarnati (R-Jefferson) violates his group's no tax increase pledge.
Gov. Tom Corbett and 34 of Pennsylvania's 253 state lawmakers have signed Norquist's pledge.
Responding to the charge in a letter, Sen. Scarnati said Senate Bill 1100 does not impose a tax on the Marcellus Shale industry because:
-- Not one penny of the impact fee is deposited into the General Fund;
-- The fee is entirely dedicated to local and statewide impacts associated directly or indirectly with gas drilling;
-- The impact fee is modeled after the municipal waste fee currently set forth in Pennsylvania law; and
-- The fee is a fixed amount per well.
Sen. Scarnati's response goes further saying, "Your letter unfortunately offers no specific justifications concerning why you believe the fee imposed under Senate Bill 1100 to be a tax. You allowed yourself to be the spokesperson for the Commonwealth Foundation which does not have a comprehensive understanding of the complexities and the needs of the Shale industry.
"For example, it is simply inaccurate to say that monies from the fee will be deposited into a slush fund for "pet projects." The permissible worthwhile efforts to be funded from the fee are specifically delineated in the legislation: impacted local roads and bridges, conservation clean-up projects, emergency preparedness, watershed protection, dam safety projects and plugging abandoned and orphaned oil and gas wells, to name several.
"I ask that you-- over the course of the next few weeks-- take a few minutes to discuss my proposed fee legislation with the leaders of Range Resources, Chief (Oil and Gas), Chesapeake (Energy), or other companies investing in Pennsylvania. They will all reinforce their belief that a reasonable, responsible severance fee is a welcomed proposal that will aid in their efforts to be good corporate citizens, will go directly to local impacted areas, and will not impair their economic competitiveness."
Sen. Scarnati noted the no tax increase pledge promoted by Norquist has an offset provision. "Currently we are considering several business tax reductions that would benefit shale companies and I believe enactment of those changes would more than exceed the fee collection estimates associated with Senate Bill 1100."

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