February 19, 2015
For local communities across Pennsylvania – and the businesses that are the economic backbone of the state – Gov. Tom Wolf’s recent announcement of a proposed additional tax on the natural gas industry is bad news.
One of the most glaring problems with putting another punitive tax on our state’s fastest-growing industry is the impact it will have on small to mid-sized businesses that are taking part in the Marcellus Shale play. Companies involved in the supply-chain side of the industry - auto dealers who have sold countless white trucks to drilling companies, restaurants and lodging facilities that have welcomed natural gas employees (just to name a few) would feel the brunt of a five percent tax on top of a 4.7 cent fee per every 1,000 cubic feet drilled if Governor Wolf’s plan ends up becoming law. What does this mean for business? Fewer open positions, less investment and in a worst case scenario, fewer jobs – not just in regions where natural gas has created economic opportunities that weren’t even thought possible a decade ago, but across the entire state.
The reality is that Pennsylvania already taxes the natural gas industry, through a close to four percent impact tax that was enacted in Act 13 of 2012 (the state’s comprehensive Marcellus Shale oversight law.) This tax has kept our state competitive in the shale play despite the fact that Pennsylvania’s corporate net income tax is still the highest in the nation, at close to 10 percent. The impact tax has also had an enormous economic impact on communities statewide. So far, $630 million has been generated from the tax and is being filtered into preserving local infrastructure, keeping historic landmarks like covered bridges intact and making other general improvements. If the impact tax goes away, so too will the promise that this revenue will be set aside for local communities. Instead, it will go directly to Harrisburg, where lawmakers will put it into a General Fund line item for education to be spent however they see fit.
The PA Chamber is aggressively working against the new tax by pointing out the enormous economic benefits that businesses of all sizes across Pennsylvania have experienced since the state began tapping into its shale resources. In a press release issued the same day as Gov. Wolf’s announcement, PA Chamber President Gene Barr expressed concern that implementing another new tax won’t only threaten the thousands of good paying, family sustaining jobs that have been realized through the shale industry - it will also lead to higher utility bills for every Pennsylvanian.
Ironically, the governor chose to unveil his plans to use the revenues from this additional tax to address a so-called education funding shortfall in a school district that has had to repeatedly raise taxes to pay for pension costs. While he states that Pennsylvania ranks 45th in terms of its state education spend, the PA Chamber is stressing that real numbers from the National Education Association put us far higher up the list – at 11th in the nation. We’re also telling lawmakers that until the $50 billion and growing unfunded pension liability is addressed, Pennsylvania will remain mired in debt to the detriment of every state taxpayer.
Founded in 1916, the Pennsylvania Chamber of Business and Industry is the state's largest broad-based business association, with its membership comprising businesses of all sizes and across all industry sectors. The PA Chamber is The Statewide Voice of Business™.