Impact taxes from the development of oil and natural gas in Pennsylvania have been a major benefit for the state. This successful system of taxation has both helped to promote development of our state’s rich stores of oil and natural gas, as well as generate significant local and state revenue to address any possible impact of energy development.
Since 2012, when the impact tax was implemented as part of Act 13*, more than $2.1 billion in revenue has been raised for the state and local communities. In that time, more than $630 million in local impact tax revenue has been distributed across the commonwealth, with more than $224 million being distributed in 2014 alone. This equitable system has helped allow Pennsylvania to become the number two state in the nation in natural gas production, and has aided the United States in becoming the world’s leading producer of oil and natural gas.
New proposals for a severance tax — a 5 percent on the value of natural gas at the wellhead, and 4.7 cents per thousand cubic feet of gas extracted — would, in effect, raise taxes on energy development by 7.5 percent in the state. This move, quintupling the level of taxation on the oil and natural gas industry, would certainly have a detrimental effect on the jobs that have been created by, and are supported by, energy development.
Pennsylvania currently has a system of taxation on energy development that works for both the state and for the oil and natural gas industry. We should keep that system working for Pennsylvania.
* Portions of Act 13 were struck down by the Pennsylvania Supreme Court in two separate decisions in 2016. The impact tax was not among those parts.