Pennsylvania Legislature Takes Step Toward Natural Gas Extraction Tax
On June 23, 2009, the Environmental Resources and Energy Committee of the Pennsylvania House of Representatives passed the Natural Gas Severance Tax Act, H.B. 1489. If approved by the Pennsylvania Senate, the legislation would impose a 5% tax on the gross value of natural gas at the wellhead as well as 4.7 cents per 1,000 cubic feet of natural gas extracted. The bill passed in the House would direct 60% of the tax revenue to the state’s General Fund. Counties and municipalities in which natural gas is extracted would receive a portion of the revenues generated from the tax. Of the top 15 gas producing states in the U.S, Pennsylvania is currently the only one that does not have a severance tax. The Act’s proponents believe that the tax is necessary to protect state residents from costs that could accompany gas drilling, including building new roads and bridges to accommodate equipment. Opponents of the Act argue that a severance tax could drive new gas companies away from Pennsylvania, and that it would produce only a fraction of the projected revenue. For more information on the Natural Gas Severance Tax Act and its prospects for enactment, contact Steve Saunders