Editorial on Gas Tax Misguided
Washington PA Observer Reporter
30 May 2010
The May 26 editorial, "Gas Severance Tax a Necessary Evil," presents
some misguided claims.
The article states that Pennsylvania is only one of very few states not
to impose a severance tax on its natural resources. In reality, many
states, such as Texas and Arkansas, offer substantial exemptions and
tax credits where drilling is difficult, similar to that found in the
Marcellus Shale region. Provisions like these have not been included in
the tax proposals.
By imposing a high severance tax, especially without comparable tax
credits to other states, Pennsylvania will find itself less competitive
in the market. A Penn State study found that Pennsylvania is successful
in its drilling industry, compared to West Virginia, because of its low
tax and more favorable business climate. The study also found that gas
producers would not be able to pass the tax increase on to consumers
because they operate in a highly competitive market.
Pennsylvania already has many strict restrictions and rules in place to
ensure protection of the environment. There are 19 specific acts and
laws in place that regulate the impacts of drilling in the Marcellus
Shale region, and they conducted 14,544 inspections. In Pennsylvania,
the DEP has over 190 employees working on oil and gas oversight.
Companies are already legally responsible for any environmental impacts
that might occur, and are required to repair damages to transportation
infrastructure. In other words, they already put money and resources
into infrastructure without a severance tax.
Natalie Rogol
Harrisburg
The writer is a research fellow for the Commonwealth Foundation.