Congresswoman Allyson Schwartz, frontrunner in the gubernatorial sweepstakes, is trying to make Pennsylvania more like…Texas! She wants to tax natural gas production from the Marcellus Shale at 5%.
Schwartz told reporters on a conference call that her plan for what she called a “reasonable, fair, moderate tax” would generate $612 million this year and nearly triple to $2 billion by 2020. She said she wants to use the money to invest in education and transportation infrastructure.
Except for an “impact fee” which Corbett promises is not a real tax (hear that, Norquist?), Pennsylvania doesn’t tax gas and oil production at all. Texas and Oklahoma, natural giants in their own right, tax at 7.5 and 7 percent. North Dakota, king of the frack, has an 11.5% severance tax. In fact, PA’s the only state with lots of oil and gas that doesn’t impose a tax on drillers. Not taxing frackers heavily may give Pennsylvania a competitive advantage, but imposing one certainly won’t drive gas companies into the arms of other states with higher rates. According to a January PEW report, PA is bringing in far less revenue from drilling than its rivals.
A state-by-state study sponsored by API predicts that between 2012 and 2035, fracking will deliver $130 billion in taxes and payments to North Dakota and its local governments. Pennsylvania will collect $60 billion, and Texas $397 billion.
Given persistent budgetary problems, and a gas boom that appears here to stay, regardless of tax rates, Schwartz’s plan seems intuitive. [StateImpact]