Coalition Letter Sent to Governor, Legislature in Opposition to Severance Tax

From PA Chamber of Business & Industry

A PA Chamber-led, multi-industry coalition sent a letter to Gov. Tom Wolf and the General Assembly last week voicing opposition to imposing another punitive tax on the natural gas industry. Gov. Wolf first spoke of his desire for a severance tax when he was campaigning for office and has proposed the tax every year of his administration. His fourth and most recent proposal, as announced during his 2018-19 state budget address, would combine a new severance tax with the existing impact tax, resulting in an effective rate of around seven percent – among the highest of the states in the shale play.

Among the coalition’s reasons for opposing the tax is the state’s improving economy and increasing tax revenue, which would seemingly render another natural gas tax unnecessary.  Additionally, multiple studies have revealed that policies that enhance the use of natural gas and other natural resources – rather than stifle growth through undue tax burdens – are projected to yield billions of dollars in investment and hundreds of thousands of jobs.  “The effective tax rate of the existing impact fee is competitive with that of other states’ severance rates; a severance tax will diminish the potential that we realize through the facts outlined in these economic reports,” the coalition wrote. “As businesses make investment decisions on where they choose to deploy capital, we must not put up unnecessary barriers to growth simply because public sector unions are advocating for more spending.”

While the Columbia Montour Chamber did not sign on to this letter, a letter was sent to our representatives in Harrisburg in October calling for long-term revenue strategies rather than “one-time fixes, borrowing and taxes on specific industries such as the Marcellus Shale Gas industry, hotels, and warehousing.”