Tuesday, February 8, 2011

Vitali Proposes Marcellus Shale Severance Tax

After several attempts to approve a Marcellus Shale severance tax in Pennsylvania failed last fall, some Democratic state lawmakers are trying again.

Elected officials couldn't agree last legislative session on whether there should be a tax, the rate of the levy and how the revenues would be divided. That was with a Democratic governor and a Democratic-controlled House. Republican Governor Tom Corbett opposes the severance tax and the GOP won control of the House in the November elections.

State Representative Greg Vitali (D-Delaware) proposed a bill for the Marcellus Shale drilling that will implement a severance tax that is similar to West Virginia's.

Vitali suggested a 2-pronged tax: 5% on the gross sale value of every 1,000 cubic feet of gas and 4.6 cents per 1,000 cubic feet which is not based on the sale price.

"The distribution (of the revenues) scheme is very straight forward. It's one-third to the general fund (state operating revenues), one-third to environmental purposes...29% of that to "Growing Greener," and one-third to local governments."

Vitali estimated the tax could bring in $245 million this year and rising to $477 million in 2014 as more natural gas is produced and the price rises.

If the severance tax is not passed, Representative Camille "Bud" George, a Clearfield County Democrat, says Pennsylvania will make budget cuts to education and senior benefits.

"When somebody is not paying their fare share of taxes, it means somebody is paying an unfair share."

State Senator Daylin Leach of Montgomery County, says that an extraction tax is not a "crazy liberal idea," because conservative states such as Alaska and Texas have legislation like this already implemented, and Pennsylvania is the only major gas producing state without a tax.

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