More Shale Tax Ideas Floated

Two more severance tax proposals are joining the party in Harrisburg.

The new bills come from Republicans legislators from the southeastern corner of the state where there is little or no Marcellus shale. However, they are the latest sign of growing support for some sort of tax on Marcellus Shale drilling. At least five tax or fee proposals are now in front of the General Assembly.

Senate Majority Leader Dominic Pileggi and Rep. Nick Miccarelli are both introducing levies that would direct revenue toward tax relief. The two measures are a far cry from Senate President Pro Tem Joe Scarnati’s impact fee, which would funnel money to local governments in the Marcellus Shale formation, as well as environmental and infrastructure projects.

Pileggi’s measure would fund a property tax freeze for senior citizens. According to a co-sponsorship memo distributed to senators, “all revenue would be deposited into a dedicated fund to provide a school property tax freeze for Pennsylvania residents 65 and older. …the tax burden would be shifted from seniors, many of whom are struggling to stay in their homes on a fixed income, to companies involved in natural gas drilling in Pennsylvania.” Pileggi’s memo doesn’t mention a specific tax rate, but claims the “reasonable and competitive tax” would raise $250 million over the next five years.

Miccarelli’s measure would impose a three percent tax on drillers. “The money would go directly to reducing the personal income tax from 3.07 percent to 2.99 percent,” explained Miccarelli. The tax would eventually increase to five percent, and, he claims, “would generate, by fiscal year 2015, $1.1 billion.”

Pileggi and Miccarelli both represent districts in the Philadelphia area, where support for a severance tax is most intense. Neither of their constituents would see any benefit from Scarnati’s impact fee, which limits revenue to communities where drilling is actually taking place. In his memo, Pileggi writes he, “support[s] Senator Scarnati’s approach,” but if a tax or fee becomes law, the Republican wants to spread its funds around. “My view is that the entire commonwealth needs to benefit from an extraction tax, regardless of whether or not communities have wells or pipelines in their own area,” he said, on the day Scarnati unveiled his plan. Scarnati’s chief of staff, Drew Crompton, did not respond to a request for comment on the new proposals.

Neither new tax has been formally introduced yet. Miccarelli said he’ll release his bill next week. It’s unclear when Pileggi’s plan will be unveiled.