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Gas tax will deflate Pa.'s economy

| Monday, Sept. 4, 2017, 9:00 p.m.
The Pennsylvania Capitol building in Harrisburg. (AP Photo)
The Pennsylvania Capitol building in Harrisburg. (AP Photo)

Pennsylvania state senators recently voted to raise taxes on natural gas as part of a $600 million tax on state job creators. Their budget proposal would slap a 5.7-percent tax on the fuel Pennsylvanians use to cook and heat their homes. It would also impose a $100 million annual “severance tax” aimed directly at natural gas developers. That's on top of the impact fees these firms already pay the government for every new drilling project.

If the state House approves the plan, Pennsylvania families could struggle to pay their energy bills and thousands could lose their jobs. Longtime employers and new businesses would lose their ability to compete in the global economy and reinvest in the state.

This is a no-brainer: Harrisburg shouldn't attempt to balance the state's $2.2 billion budget shortfall on the backs of working-class Pennsylvanians. Instead, lawmakers ought to trim bloated programs.

The Keystone State has a spending problem, not a revenue problem. In the past five years, general spending shot up 16 percent, while inflation increased just 6 percent. If spending had kept pace with inflation since 2012, the state wouldn't face its current budget shortfall. In fact, it would enjoy a small surplus.

Since 2008, Pennsylvania has benefitted tremendously from responsible development of Marcellus shale. The shale contains a staggering amount of natural gas that wasn't accessible until the advent of advanced technology in the past decade.

Developers have recovered the gas at a steady pace — and employed hundreds of thousands of Pennsylvanians in the process.

Between 2007 and 2012, the number of natural gas jobs in Pennsylvania rose nearly 300 percent, according to the Bureau of Labor Statistics. Wages in the industry climbed 14.6 percent, compared to the overall average wage gain of 10.9 percent.

Gas drillers have delivered a windfall to the state Treasury and local governments. Impact fees collected from energy developers have generated more than $1 billion for Pennsylvania since 2012.

Pittsburgh, which sits atop Marcellus shale, experienced faster economic growth than almost every other city in the nation between 2010 and 2015. Shale development accounted for most of those gains, according to a study by the Brookings Institution.

Imposing more taxes on gas drillers could force some of them to shut down or decide to develop gas fields in other, tax-friendly states.

Instead of targeting developers, lawmakers would be wise to assist them in any way possible. An analysis by Wood Mackenzie found that adopting pro-energy development policies — opening new areas for responsible exploration, cutting back permitting delays and streamlining regulations — would help create a million new jobs nationwide by 2025, boost government revenue by $38 billion, and lower the average household's energy costs by almost $170 a year.

Pennsylvania is enjoying an energy transformation that delivers hefty paychecks and lower utility bills to millions of state residents. The last thing lawmakers should do is pass legislation forcing Pennsylvanians to earn less, pay more for goods and services, and stifle this industry with hundreds of millions in new taxes.

Lowman Henry is chairman and CEO of the Lincoln Institute and host of the weekly Lincoln Radio Journal.

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