PA Senate narrowly approves severance tax

FRITZ MAYER
Posted 8/2/17

HARRISBURG, PA — After pushing for a severance tax on Marcellus Shale gas for nearly a decade, the Pennsylvania Senate on July 27 voted 26 to 24 for a package of measures intended to …

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PA Senate narrowly approves severance tax

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HARRISBURG, PA — After pushing for a severance tax on Marcellus Shale gas for nearly a decade, the Pennsylvania Senate on July 27 voted 26 to 24 for a package of measures intended to provide revenue to fill the nearly $1.5 billion gap in the proposed state budget. The spending plan for the budget was approved nearly a month ago, but the revenue part of the picture is still in doubt.

Democrats praised the severance element of the revenue package as being overdue. State Sen. Vincent Hughes (D-7th) said, “We have broken new ground today with the passage of this funding package because, for the first time in Pennsylvania, a severance tax on Marcellus Shale natural gas drilling has made significant movement in the legislature. Senate Democrats have been working to enact this tax for nearly a decade. It’s long past time for wealthy natural gas drillers to pay their fair share for profiting off our natural resources. It’s a modest tax, but a tax nonetheless, and it will help close the budget deficit without hurting taxpayers.”

Republicans in the Senate said this new tax was necessary. Senate President Pro Tempore Joe Scarnati said, “The reality of our state budget situation this year required many difficult decisions to be made. With today’s completion of a revenue package to fund the budget spending plan, we have taken a responsible step forward to set our Commonwealth on solid financial footing.

The Senate spending plan also includes a new 5.7% tax on natural gas bills, a 0.5% increase in taxes on electricity bills, and a 1% hike on telecommunications bills. The measures would also include a new sales tax on Internet purchases, and calls for the state to borrow $1.3 billion against future payments from the state’s tobacco settlement.

A couple of Republicans in the House responded angrily to the proposal. Rep. Seth Grove (R-196th) issued a statement saying, “Corporations owe the state $1.2 billion in back taxes, which would all but fill the spending gap in the 2017-18 budget. Additionally, state government has traditionally under-spent appropriations by $1.4 billion each year. There is absolutely no way the General Assembly should even entertain this haphazard plan to increase taxes.”

He was joined by House State Government Committee Chairman Daryl Metcalfe (R-12th), who said in a statement, “The Senate’s latest taxpayer-fleecing scheme should be immediately declared dead on arrival by the House Republican majority.”

 The plan in the Senate was approved by votes from 14 Republicans and 12 Democrats. As of August 1, no vote had been scheduled in the House.

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