Window for Natural Gas Tax Closing Fast in Pennsylvania
By John Gramlich, Staff Writer
More than three months have passed, however, and there is still no severance tax. With campaign season now in full swing, lawmakers in Harrisburg have only until Thursday's (Oct. 14) scheduled pre-election adjournment to strike a deal on how to tax an industry that, as Stateline reported last month , has become a major economic powerhouse in the state in recent years. Every other major gas-producing state in the nation levies a severance tax on natural gas, and if lawmakers leave Harrisburg without passing one, Pennsylvania would remain among the friendliest tax environments for the industry. Gas companies are investing heavily in the political process to ensure that is the case.
The debate breaks down along party lines. The Democratic-controlled state House already has passed a severance tax, but the Republican-controlled state Senate — which has long represented a roadblock for Democratic proposals — is unlikely to approve the relatively high tax passed by the House. The two sides are " worlds apart ," Republican Senate President Joe Scarnati tells The Philadelphia Inquirer . Democratic Governor Ed Rendell, who has pushed for a severance tax for two years, seems to agree. "The effort to get this done has broken down," he says.
What makes the current debate so important is that Rendell is term-limited and, if the polls are accurate, is likely to be replaced in office by Republican Attorney General Tom Corbett, a staunch opponent of any severance tax. Corbett argues that taxing the industry — even though every other state does it — would stifle job creation and, potentially, lead gas companies to search elsewhere for natural gas. Corbett's Democratic opponent, Dan Onorato, favors a severance tax.
"This is simple," a spokesman for Corbett tells The Wall Street Journal . " Corbett is for jobs; Onorato is for taxes ."
Onorato, for his part, claims Corbett is in the pocket of the oil and gas companies, and points out that Corbett has received hundreds of thousands of dollars in campaign contributions from the natural gas industry.