Monday, September 13, 2010

Will Oct. 1 Severance Tax Deadline Be Met?

Governor Ed Rendell and Pennsylvania Senate Republicans are rattling their legislative sabers, as lawmakers prepare to hash out an agreement on a natural gas severance tax when they return to work this week.
Legislative leaders have promised to pass a severance tax by October 1, but both Governor Rendell and Senate Republicans are starting to doubt whether that can happen.
Rendell is pushing for a five percent tax on gas extraction, but Senate President Pro Tem Joe Scarnati’s top staffer, Drew Crompton, says the rate is “unreasonable.”
Rendell says he’d veto a rate he considers too low.

"It’s not good enough for the legislature to send me a Shale tax and say, ‘Governor, we agreed that we’d send you a severance tax, and we’ve sent you one at one percent for the first five years.’ Which ramps up at year six, yes, after 50 percent of the natural gas has been taken out. I won’t sign that."

Drew Crompton, a staffer for Senate President Pro Tem Joe Scarnati, says the Senate GOP likes Arkansas’ tax rate.

"They allow capital recovery for the price of the wells to be drilled, and the equipment used to drill those wells. So that is something that we think is very reasonable. Should be included in the tax mix."

Democrats and Republicans appear more willing to compromise on how the revenue would be distributed. Both Rendell and Senate Republicans want some of the money to go to local governments in drilling areas. There’s broad support for environmental causes benefiting from the tax, as well.

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