Pennsylvania labor leaders called for an equitable and loophole-free severance tax on Marcellus Shale drilling at a news conference hosted Thursday in Montoursville by the Coalition for Labor Engagement and Accountable Revenues (CLEAR).
The conference was one of several stops on the "Close the Loopholes Tour," a statewide tour encouraging the 1.1 million members of the CLEAR Coalition to speak out to their legislators in support of an equitable severance tax.
According to Sharon Sober, director of the American Federation of State, County and Municipal Employees District Council 86, the Pennsylvania budget already is counting on $70 million in revenue from the proposed severance tax.
Von Treas and Sharon Sober, both representing the American Federation of State, County and Municipal Employees in New Columbia, support an equitable severance tax on Marcellus Shale drilling.
A severance tax is needed to prevent even more cuts to core services, she said.
Sober said Pennsylvania landowners already are paying taxes on the drilling that occurs on their property.
"If the landowner has to pay taxes, big oil should, too," she said.
When a landowner receives a check from a gas company, the funds are considered rental income and are included in the total income subjected to federal and state withholdings. That can result in thousands of dollars being taken in taxes.
"All the while, the wealthy gas companies pay nothing," Sober said.
The revenue supplied by a severance tax would provide significant long-term income for the state that may be used to support education, health care and the environmental and structural costs associated with Marcellus Shale drilling, Sober said.
An equitable severance tax would fit three criteria, according to Sober: "It sets a reasonable tax rate, limits unnecessary exemptions and loopholes and encourages the hiring of Pennsylvania workers.
"Lawmakers must do the right thing when developing this proposal and pass a strong natural gas severance tax - not one rife with tax breaks for industry," she said.
Von Treas, an attorney with AFSCME, noted that the majority of gas production occurs in the first five years after the well has been tapped and called the request by some politicians to make the first five years of production exempt from a severance tax "ridiculous."
Because of the vast amounts of Marcellus Shale in the state, gas companies are intent to drill whether they are taxed or not, Treas said.
"No tax incentives are needed to promote the industry of Marcellus Shale," she said.
Pennsylvania is the only mineral-rich state with no severance tax. States with a severance tax, which include Texas, Alaska, Wyoming, Louisiana, Oklahoma and West Virginia, all have seen increases in production since their taxes were enacted, she added.