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PA Governor Wolf Proposes Gas Severance Tax

Pennsylvania Governor Tom Wolf proposed a 5% severance tax on natural gas production.  Though specific details are not yet available, Wolf recommended a tax modeled after West Virginia’s severance tax, which currently taxes gas at a rate of 5% and imposes an additional fee of 4.7 cents per 1000 cubic feet of extracted gas.  Wolf believes the proposed tax could generate $1 billion in new revenue for the state.  The bulk of this revenue would go to fund education.  Wolf said the tax would not be levied in addition to Act 13’s well fees, but rather, the well fees would be rolled into the tax.

Responding to Wolf’s tax proposal, David Spigelmyer, president of the Marcellus Shale Coalition, criticized the proposal and noted that the natural gas industry already pays significant taxes in Pennsylvania.  Spigelmyer believes the new energy tax will discourage capital investment and make Pennsylvania a less competitive market for the natural gas industry.  Spigelmyer stressed that the investments made by the energy companies act as a driving force for the Pennsylvania economy and tax base – accounting for more than $700 million in royalties paid to landowners and more than 200,000 jobs created.  Spigelmyer believes Wolf should focus on the creation of new jobs rather than new taxes.