Here it comes again: Severance tax a nonstarter
If the GOP-controlled Legislature goes along with Democrat Gov. Tom Wolf's renewed call for a severance tax, it would be a surefire way to debilitate Pennsylvania's shale-gas industry.
Always a bad idea, a severance tax is an even worse idea this time around — because 2016 saw the industry “shed a third of its jobs” and gas prices are still rebounding “from record lows,” according to the Commonwealth Foundation. The state's own Independent Fiscal Office estimates that Pennsylvania's existing impact fee is the equivalent of a 6.9-percent severance tax — higher than severance taxes in Louisiana, Wyoming and West Virginia.
Lawmakers should revisit the impact fee to ensure that counties and municipalities are spending that money on offsetting drilling's effects, not on the sort of seemingly unrelated purposes that the state auditor general highlighted in a report last fall.
With the industry showing some hopeful signs — a late-2016 upswing in well permits, increased 2017 investment by companies including Consol Energy and EQT Corp. — nothing would blunt that renewed momentum faster than saddling drillers with a severance tax.
The Legislature must stand firm against this tax-and-spend governor. It must reject both his severance tax, which would depress the shale-gas industry, and a misguided notion that has long shafted taxpayers: more revenue, not less spending, is the answer to Pennsylvania's fiscal health.