Pennsylvania is following West Virginia’s lead in taxing natural gas extraction in the state.

[Panich52]

WV used as model for PA's natural gas tax proposal

Pennsylvania is following West Virginia’s lead in taxing natural gas extraction in the state.


Pennsylvania Gov. Tom Wolf yesterday unveiled a plan to raise money for state schools by implementing a severance tax on natural gas production in the state.

For years, our neighbor up north has been one of the few energy producing states to not charge a tax on the resources it pulls from the ground. Following $1 billion in funding cutbacks for schools in recent years, Wolf hopes to use the tax to shore up funding for the state’s education system.

And he’s using West Virginia as a selling point.

“If states like Texas, West Virginia and Oklahoma are able to charge a severance tax to fund key priorities, it is long past time Pennsylvania does too,” Wolf said in a memo to Pennsylvania lawmakers.

Wolf’s office said the governor’s severance tax proposal has been modeled after the system in West Virginia. He’s proposing a 5 percent tax on the value of gas extracted at the wellhead as well as a 4.7 center per thousand cubic feet of volume extracted from the ground. Those rates are identical to West Virginia’s rates.

“Implementing a similar structure to West Virginia will ensure that Pennsylvania is competitive with neighboring states,” Wolf said. “In addition, this approach has the benefit of being field tested.

“West Virginia offers proof that a state can build a thriving unconventional natural gas industry while simultaneously using a portion of the proceeds to help make a better future for its citizens,” he said.

Unlike West Virginia, the Pennsylvania tax will be exclusively earmarked for the state’s education system. In West Virginia, the 5 percent tax is deposited in the state’s General Revenue Fund, where it can be appropriated as lawmakers see fit. The 4.7 cent tax goes to help pay down the state’s debt from its old workers’ compensation system.


http://www.charlestondailymail.com/article/20150211/DM05/150219787

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