MSC in Times-Tribune: Higher Energy Taxes Stifle Growth

By David Spigelmyer

As the state’s budget debate drags on, we’ve seen encouraging signs of principled leadership from some in Harrisburg who are committed to creating an environment that encourages job and economic growth opportunities. Unfortunately, some remain singularly focused on jamming through job-crushing energy taxes.

Pennsylvania is in the very early stages of potentially realizing long-term natural gas-driven opportunities. From using more natural gas to provide affordable and reliable electricity, such as projects underway in Archbald and Jessup, to delivering energy savings to thousands of consumers, small businesses and schools and growing good-paying manufacturing jobs, the commonwealth has the opportunity for a brighter future.

According to a report commissioned by the Wolf administration, Pennsylvania’s abundant shale resources present a multibillion-dollar opportunity to transform the state into a global petrochemical manufacturing leader.  To fully realize these important manufacturing opportunities, Pennsylvania needs competitive policies that strengthen our economic climate.

We’re at a crossroads. Do lawmakers support domestic natural gas production and the opportunities for steady, sustained economic and revenue growth? Or will we go down a path of higher taxes, fewer local jobs and frankly, very little revenue?

Gas producers pay a special impact fee, our tax on natural gas, that has generated more than $1.2 billion. This unique fee is on top of all the other business taxes, including the second-highest-in-the-nation corporate net income tax.

Last year, this tax equated to a 9.1 percent effective production tax rate, the highest effective rate of any state that imposes a drilling activity tax. This impact tax generated more revenue than the combined severance tax collections of West Virginia, Ohio, Colorado and Arkansas, despite the fact that production in those four states exceeded Pennsylvania’s.

These proposed energy tax increases, combined with chronic permitting challenges, an onslaught of new unnecessary regulations, and local natural gas pricing that is a third less than what operators and landowners receive in other competing regions, will put the commonwealth on a path that threatens growth and new energy investment.

Just last week, natural gas production in Louisiana, hit a four-year high. What’s more, we’ve watched as hundreds of millions of dollars in new investments have been made recently in petrochemical manufacturing across the Gulf Coast region.

Pennsylvania is already lagging as the latest state data shows that Ohio and West Virginia have realized much larger production rate increases this year.

Given these fragile dynamics and the need to encourage job growth, our leaders in Harrisburg should work toward common-sense solutions that make Pennsylvania more competitive.

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