PA GOP Choosing a Worse Overall State Business Climate Over a Severance Tax on Marcellus Shale Coalition

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The latest reports seem to suggest there is once again some fragile agreement on a state budget framework, but in case it isn’t finalized yet, everybody really needs to step back and reflect on how insane the legislative Republicans’ revealed preferences are here.

The national and state Republican Parties talk a lot about the virtues of low taxes for businesses and individuals, and particularly for high income individuals. And they also favor fossil fuel company interests, because those companies provide a huge part of the donor base for Republican political campaigns.

The PA budget impasse creates a situation where these views are in tension, but the choice here should be obvious.

You don’t have to be Arthur Laffer to believe that having the second-highest sales tax in the nation would be bad for the state business climate and jobs.

And yet that is exactly the plan Republicans are supporting, just to keep the Marcellus Shale Coalition–an industry that employs less than 1% of Pennsylvania workers–from paying a severance tax comparable to what these companies are used to paying in every other big natural gas-producing state.

I’m old enough to remember back in 2011 when gas industry executives told Rep. Mike Sturla in testimony that they wouldn’t leave Pennsylvania even if the state’s severance tax was 1% higher than the next highest tax state:

Rep. Michael Sturla of Lancaster County said industry leaders have, during testimony in front of his committee, said they would not leave Pennsylvania even if the state’s fracking tax is 1 percent higher than the highest gas drilling tax in the country.

“Frankly, they have been more forthcoming than some of our politicians who have said (the industry) would leave,” Sturla said. “I don’t think it’s the industry that’s the bad guy. It’s other people who are standing in the way.”

This lobbying push is all a big charade by an industry with plenty of cash to burn on lobbying. When the severance tax eventually passes, they’ll pay it happily. And there’s precious little evidence that they’ll pass the increase on to gas consumers either.

By contrast, some national retailers will probably stay out of Pennsylvania because of the second-highest in the nation sales tax, costing PA residents jobs. This doesn’t even make sense from the perspective of Republican tax politics, let alone the public interest.

How much is lobbying impacting this? The gas industry have given Senate President Pro Tempore Joe Scarnati over $500,000, House Speaker Mike Turzai over $275,000, and almost $100,000 to Senate Majority Leader Jake Corman. You can see how much your Rep. got here.

Lots of people are of course interested in this issue because of the implications for education and other services, but it’s even more important that we keep watching the rule-writing process, because that’s where the weak appetite for regulating and taxing the gas industry can cause the most damage to air quality, water, and the climate.

With the gas industry able to get away with so much mischief in plain site during this PA budget season, just think about what they’re getting behind closed doors.

This entry was posted in Elections, Energy, Environment, Issues, State House, State Senate.

One Response to PA GOP Choosing a Worse Overall State Business Climate Over a Severance Tax on Marcellus Shale Coalition

  1. bill22 says:

    It is not an either/or issue, sales tax or severance tax. A severance tax would bring in around $300 million. Wolf wants $2 BILLION. Where else besides sales or income tax hikes is he going to get it?