Higher Energy Taxes: ‘Chasing a Nickel When There’s Dollars Down the Road’

A growing chorus of Pennsylvanians are calling out continued attempts to enact new and additional taxes on natural gas development as a job-crushing, short-sighted policy that will hurt consumers and manufacturers.

Pennsylvania Manufacturer’s Association President David Taylor and Pennsylvania NFIB executive state director Kevin Shivers joined MSC’s Dave Spigelmyer this week on Lincoln Radio Journal’s “Capitol Watch” to discuss how higher energy taxes undercut the Commonwealth’s competitive edge.

As Spigelmyer explained during the interview:

People are used to working hard in Pennsylvania but we many never have that opportunity if we squander it and waste it over a short-sighted approach. We’re chasing a nickel when there’s dollars down the road from jobs generated through manufacturing.

Agreeing with Spigelmyer, PMA’s Taylor explained during the discussion that pro-growth policies will spark greater economic growth across Pennsylvania’s industries and lead to more revenue generation.

“It’s like hey, if you want to close the budget gap in future years, you need economic growth and here is the path to get there and so rather than trying to cannibalize everything now, you should put in place a pro-growth, pro-production agenda for the future. That’s how we’ll get into a virtuous cycle rather than this never ending budget battle.”

Indeed, additional energy taxes will do more harm than good to the job-creating natural gas industry, consumers and small businesses, according to research from the Allegheny Institute for Public Policy.

In a PennLive column this week, Allegheny Institute senior fellow Colin McNickle said lawmakers seeking to add more taxes on natural gas “should look elsewhere” because such a policy “carries too many damaging unintended consequences.” As the Allegheny Institute found:

“It will serve as a strong signal to current or potential Pennsylvania businesses that they too will be targets when the state needs money.”

To ensure we can leverage the job-creating manufacturing opportunities that increased shale development generates, Pennsylvania needs competitive policy solutions to create more community benefits and drive investment. Here’s more from Spigelmyer’s “Capitol Watch” discussion:

WHAT’S AT STAKE

“Over the last six or seven years we’ve watched utility rates drop anywhere from 57 to 81 percent depending on which utility is providing your natural gas service. On average, it has saved every consumer in the state an average of $1200 a year.”

“So when I hear policymakers say ‘Oh, the gas industry is here, [operators] have nowhere else to go,’ I would tell you they’ve already gone. We’ve already lost significant amounts of capital, significant number of jobs, and with that comes the revenue generated from the tax benefit of having employment in this industry and the downstream opportunities that are presented through the use of those products.”

THE IMPACT OF EVEN MORE TAXES

“We do have a bright spot in front of us with Shell’s petrochemical facility in the western part of Pennsylvania. I fear we jeopardize the varied supply that could deliver the jobs from that plant. We’re not at that point yet, but I would tell you that’s certainly a concern that lawmakers should take into account when they, in short sight, add a tax on top of a tax, on top of a tax, on top of a tax.”

We already have a tax and that’s the impact tax and it’s generated $1.2 billion in the last six years. It’s been an extraordinary winner for counties and local governments across Pennsylvania- all 67 counties have benefitted. Our percentage rate of tax is 9.61 percent and that outpaces every major shale play in the United States.”

“The (gross receipts tax) is a really short-sighted approach as well. You’re penalizing folks for using a commodity that’s generated business and helped in our own state. We’re discouraging folks from using it and developing the manufacturing base that would actually grow revenues from a personal income standpoint. I think that would be a far more effective approach at using the commodity.”

DRIVING INVESTMENT AND CREATING JOB

“I will tell you that the liquids that are being developed in the western part of Pennsylvania have certainly helped us in terms of saving. The Marcus Hook facility in Philadelphia has created a huge opportunity in that petrochemical hub. It has attracted the investment of Royal Dutch Shell in the western part of Pennsylvania and it’s why I take this cautious approach because I fear the fact that we could scare some of those types of investments away.”

“We lost for the last three decades a countless number of jobs overseas and it’s been primarily because of high energy costs and our high labor rates. Today, we certainly win on, as I’ve said before, the most affordable energy on the planet. We have the potential to re-shore jobs back to Pennsylvania if we play our cards correctly—to put people back here making things. We’ve got a wonderful workforce, we’ve got skilled tradesmen and folks that are willing to work hard. People are used to working hard in Pennsylvania but we many never have that opportunity if we squander the opportunity and waste it over a short-sighted approach. We’re chasing a nickel when there’s dollars down the road from jobs generated through manufacturing if we play those cards correctly.”

Join the conversation online with #SayNoToSeverance and share your support for job-creating policies.

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