This page was last updated on December 22, 2014.
Severance tax is better for residents; Sharon Ward - Pennsylvania Budget and Policy Center (PBPC); Beaver County Times; December 21, 2014.
Ms. Ward is Executive Director of the PBPC. PBPC is a “project of the Keystone Research Center” (KRC). KRC is a member of the Economic Analysis and Research Network (EARN). “EARN is coordinated by the Economic Policy Institute (EPI).” Whew, got all that? All of these organizations are leftist advocacy groups. Heck, even the Pittsburgh Post-Gazette concedes PBPC and KRC are “liberal research groups.”
Previous PBPC letters I critiqued were “Not time for corporate tax cut bill” and “State should end tax collection discount.”
Below is a detailed critique of the subject letter.
“The Marcellus Shale Coalition obscured the real issue about a severance tax versus an impact fee on drillers when it noted in a Dec. 9 Associated Press story that natural gas prices recently fell in Pennsylvania.”
[RWC] PBPC spammed this letter to papers throughout Pennsylvania.
As you can tell from this and the two previous PBPC letters, the PBPC consistently supports higher tax rates for Pennsylvanians.
“Regardless of gas prices, which will always fluctuate, a severance tax based on production will generate two-to-three times more revenue for Pennsylvania than the current impact fee in the first year.
“While a 5 percent severance tax might produce $800 million in revenue next year, that’s still nearly three times the $270 million expected from the impact fee.”
[RWC] In case you forgot, the stated purpose of the impact fee was to mitigate local impacts of drilling, such as increased bridge/road wear and tear and increased loads on water and sewerage systems. A PG story said, “Most of the money collected would still be reserved for local governments, and could be spent on roads, bridges and water and sewerage systems. Other revenues would go to statewide infrastructure projects, and starting in 2012, $1 million would be set aside for emergency responder training and equipment.” In other words, the stated intent of the impact fee is to address local infrastructure issues specifically related to drilling, not to create a slush fund for redistribution throughout the commonwealth.
“As the value of gas production continues to increase, that difference and the tax’s revenue will grow, reaching $1 billion within a few years.”
[RWC] Since there’s no mention of using the windfall to reduce other tax rates, does anyone care to guess where the slush fund generated by a severance tax would go?
“A severance tax is a much better deal for Pennsylvania taxpayers contending with the environmental and social costs of drilling activity and a $2 billion state budget shortfall next year.”
[RWC] You may recall even the BCT finally conceded taxing Marcellus gas is “a tax that is paid by consumers” and acknowledged “Raising taxes could slow the economy.” No mention of that here, though.
“It’s time for Pennsylvania to join every other major gas-producing state and adopt a severance tax.”
[RWC] According to the Tax Foundation, PA’s business tax climate already ranks 34th for 2015, three positions worse than 2014 and 13 positions worse than 2012.
© 2004-2014 Robert W. Cox, all rights reserved.