HARRISBURG, Pa., Feb. 12 (UPI) -- The state's governor said gas taxes will help schools, but an energy coalition working in Pennsylvania said it will discourage capital spending plans in shale.
Arguing schools have suffered from $1 billion in funding cuts, Pennsylvania Gov. Tom Wolf proposed a severance tax on gas extraction in the state to help right the state's economic ship.
The state hosts the Marcellus shale natural gas formation, which accounts for almost 40 percent of all shale gas produced in the United States. The governor's proposal, dubbed the Pennsylvania Education Reinvestment Act, calls for a 5 percent tax plus 4.7 cents per thousand feet of gas extracted.
The governor said the proposal is modeled after severance tax plans in other states in the region, but the Marcellus Shale Coalition has already reaped the benefits of shale natural gas and further tax pressure would cause more harm than good.
"Make no mistake, adding a 5 percent tax to any business sector – including the energy industry – is going to reduce capital spending and hit the supply chain, especially Pennsylvania-based small and mid-sized businesses," coalition president David Spigelmyer said.
The governor's office said states rich in natural gas, like Texas and Oklahoma, have similar taxes in place. By modeling those in the region, specifically neighboring West Virginia, Wolf said the proposal ensures Pennsylvania remains competitive.
Freshman Gov. Wolf frustrated those in the shale natural gas sector last month when in January he enacted a ban on oil and gas drilling on state land.
Louis D'Amico, president and executive director of the Pennsylvania Independent Oil & Gas Association, said the moratorium struck a blow against an industry that's already returned more than $700 million in revenue to the state in the last seven years.
