Lawmakers discard practical budget answer for more taxes solution
Pennsylvania lawmakers stuck for a budget solution rolled out their go-to argument this week, reviving the call for severance tax on gas drilling.
The industry appears to be making a rebound in Pennsylvania, the nation’s No. 2 gas state thanks to Marcellus Shale deposits. And proponents of the tax point out that Pennsylvania is the only major natural gas producer that does not tax its production.
The state does impose an impact fee, much of which goes to the communities where natural gas activity is the greatest.
There is an argument to be made for the severance tax at this time, particularly if it is attached to a quicker permitting process on production wells for the gas producers.
But there are a lot of counterarguments. First of all, the tax is projected to raise between $100 million and $250 million a year, which hardly solves the state’s budget deficit gap of roughly $2 billion.
Most importantly, when all talking points are set aside, this is nothing more than the typical state solution to a budget – tax more.
Three weeks ago, lawmakers were pushing for a much more thoughtful, practical solution. They identified multiple sources of non-tax recurring revenue from gaming and wine and spirits modernization and surplus fund transfers that would have solved the deficit and set up about a $300 million surplus going into the next budget year.
Now that’s a solution that makes sense. Instead, the power brokers moved away from that to a higher hotel tax and now a gas severance tax as their solutions.
Government can always find ways to tax more. The solutions that benefit all Pennsylvanians – citizens, workers and business owners – are those that call for a wiser use of the available revenue.
And there’s plenty of that. Pennsylvania is one of the highest tax states in the nation. Not having a gas severance tax is nothing to be embarrassed about. Other states have exemptions from taxation and tout them to attract business and increase employment.
In Pennsylvania, such incentives are viewed as evil – which is why our state struggles to balance its budget and maintain robust employment.