George: Fair Tax on Natural Gas Drillers is Alive and Well

HARRISBURG – State Rep. Camille “Bud” George, chair of the House Environmental Resources and Energy Committee, said his severance-tax legislation that would have natural gas drillers in Pennsylvania’s Marcellus Shale deposit pay their fair share for a valuable state resource is alive and well.

“When I first heard that the severance tax was off the negotiating table, I admit to feeling betrayed and thinking Pennsylvania taxpayers had taken one on the chin,” saidGeorge, D-74 Houtzdale. “However, after reading the governor’s entire remarks, I understood the reasoning and the pressures he is facing as he seeks compromises to reach a budget accord.

“In truth, a severance tax would have modest effect on the revenues for this fiscal year, which already is one-sixth over. We’re talking less than $90 million in increased revenues this fiscal year, even if it were implemented today.”

George said the timetable for implementing a severance tax always was negotiable.

“I am going to press ahead with a severance tax through my House Bill 1489, perhaps with the idea that it will take effect April 1, 2010,” George said. “This would give the industry time to prepare, and will avoid an even more super-heated political arena next year, when the governorship and the entire House is up for election.

“Revenue shortfalls in the billions of dollars are forecast for next year and in 2011, so a fair and reasonable severance tax is coming,” George said. “I thank my House leadership, especially Speaker Keith McCall, for standing firm on this issue, which is one of fairness for Pennsylvania taxpayers.

“This is Round One,” George said. “As the governor indicated, the fight is not over, and House Bill 1489 is alive and well.”

HB 1489 calls for a 5 percent tax on the gross value of gas extracted and 4.7-cents for every thousand cubic feet of gas produced. The tax would not apply to smaller wells producing 60,000 standard cubic feet a day or less.

George said the tax would generate roughly $600 million annually for state and local governments by 2013-14.

“Pennsylvania – not the gas industry – is blessed with bountiful natural gas supplies that will power the nation for decades to come,” George said. “Every state producing more natural gas than Pennsylvania has a severance tax to pay for the extraction of a natural resource, its toll on state and local infrastructure and to protect air and water.

“Low gas prices have not slowed Marcellus Shale drilling in Pennsylvania,” George said.

“House Bill 1489 — the Natural Resource Severance Tax Act — would ensure a fair return for its taxpayers for the removal of a natural resource owned by citizens and requiring use of taxpayer-paid infrastructure and Commonwealth natural resources to extract.

“Pennsylvania families need a tax break, not the gas industry, which will reap tremendous profits from our natural resources,” George said.

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