Tom Wolf’s pledge to add a severance tax on energy producers is irresponsible and does not take into account the downside for most Pennsylvanians and the communities where they live. His potential job-crushing energy tax on shale development would harm Pennsylvania’s economy, cost jobs and shortchange the potential benefits for the long-term success of our state. New and higher energy-tax advocates wrongly assume that capital investments being made by the natural gas industry won’t be impacted by such a tax.
Wolf, the Democrat candidate for governor, claims his gas tax would generate $1 billion per year if production levels remained the same, but he has no analysis to back his theory. Unfortunately, as is too often the case, political campaigns lend themselves to sound bites and talking points rather than substantive analysis and factual data.
Our industry supports the need for world-class schools and the need to resolve the pension crisis. However, running TV ads with schoolchildren stating the oil and gas industry doesn’t pay its fair share and declaring a severance tax will cure all is both misguided and reckless.
Currently, Pennsylvania — which is one of the highest-taxed and challenging business-climate states — is the only state that imposes an impact tax of 3.1 percent (based on actual sales into the pipeline delivery system) on the industry.
The impact tax has generated more than $630 million over the past three years, overwhelmingly benefiting local communities across the commonwealth rather than sending tax revenues to Harrisburg’s General Fund for redistribution. Additionally, more than $2.1 billion in other shale-related taxes have been generated across the commonwealth.
It’s no wonder that a top Pennsylvania State Association of Township Supervisors official recently stated that local communities “will lose out immensely” if a new energy tax is enacted.
So why risk the thousands of Pennsylvania jobs tied to shale development?
Top organized-labor leaders agree that new energy taxes “will stifle growth” and job creation. In fact, Sean McGarvey, president of the North America’s Building Trades Unions, recently said that lawmakers need “to make sure that they don’t kill this industry before it has the chance to make the largest impact in Pennsylvania and across the country,” adding: “I wouldn’t want to be on the wrong side of history.”
If a crippling tax hike is implemented, the potential for capital to be quickly redeployed is a not-so-distant reality. As energy producers decide to shift capital to more competitive shale plays, it is the local supply-chain companies, typically family-owned small businesses, labor union workforce and communities that are at most risk. We have talented men and women, many who are friends and neighbors, dedicated to delivering on the promise of energy security for our state and beyond who have much at stake.
Let’s continue to work together to get this opportunity right and prevent a race to the bottom that will impact job opportunities and potentially thwart the renaissance of new manufacturing through affordable, abundant and “all American” natural gas supplies produced in Pennsylvania.
David Spigelmyer is president of the Marcellus Shale Coalition (marcelluscoalition.org).
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