Representatives of the oil and gas industry and business Tuesday said they are concerned about bipartisan discussion in the General Assembly on the adoption of a severance tax on natural gas production as part of an effort to deal with the state’s budget shortfalls.
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Stephanie Catarino Wissman, Executive Director of Associated Petroleum Industries in PA, said natural gas drilling and production companies have already paid $2.1 billion in state and local taxes since 2007 and another $630 million in Act 13 drilling impact fees since 2013.
Adding a severance tax would have a severe impact on the natural gas industry in the state which has added thousands of jobs to Pennsylvania’s economy.
Louis D. D’Amico, President & Executive Director of the PA Independent Oil and Gas Association, said Pennsylvania’s present structure of business and sales taxes and the drilling impact fee now about equals the combination of business taxes and a severance tax in West Virginia, a state often compared to Pennsylvania.
D’Amico noted even the discussion of a severance tax is having a dampening effect on business in the state.
He said the number of drilling rigs now in Pennsylvania has been reduced significantly, from 111 in 2011 to just 56 now. Those rigs he said are moving to Ohio where there is a potential to produce oil, other valuable liquids related to “wet” natural gas and a better tax structure.
Eugene Barr, President and CEO of the PA Chamber of Business and Industry, said talk of a severance tax is just the most recent effort to make businesses pay more taxes at a time when businesses, particularly manufacturing, are just starting to see a comeback. He said any increase in business taxes is always passed on to consumers.
Chad Amond, President of the Westmoreland County Chamber of Commerce, said his county has seen the benefits of the existing Act 13 drilling fees in more road construction, emergency preparedness and other projects as well as from natural gas drilling and development.
He said the County has also been involved in job training programs through ShaleNet at Westmoreland County Community College that has trained over 9,500 students.
A major overhaul of the tax situation for the natural gas industry in Harrisburg is like a butterfly flapping its wings and having an impact in Westmoreland County.
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Related Links:
PUC Expects To Collect $224.5 Million In Act 13 Drilling Impact Fees In 2014
