Top Corbett Challenger Puts Cards on Table, Wants to Tax Fracking

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.

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]