Wednesday, September 15, 2010

Severance Tax Impact--Not Much

As the Pennsylvania legislature approaches an October 1st deadline for imposing a severance tax on natural gas extraction from the Marcellus Shale, a new report from Penn State's Institute for Research in Training and Development examines the potential impact of such a tax on Pennsylvania—the only major natural gas-producing state without one.

Institute director David Passmore says for every $100 million of tax generated and every $100 million of tax revenue spent, there’s a minor effect on the state’s economy. The slight declines in employment, gross state product, personal income and population due to the tax could be more than offset by the effects of increased spending of severance tax revenue by state and local governments.

The Marcellus Shale represents immense economic opportunities for the state, according to Passmore, but there are legitimate environmental, health and safety questions, to which he expects some factual answers over the coming year.

To enhance the study’s credibility, Passmore says the institute did not use funding from the industry or its opponents.

The report is available at:

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