Friday, March 20, 2009

Taxes on Natural Gas Drilling Proposed

A state government commission has voted to significantly increase permit fees imposed on energy companies drilling for natural gas in Pennsylvania's Marcellus Shale formation, but Governor Rendell is still leading a campaign to impose severance fees on the energy industry as well. Rendell claims a tax on Shale extractions could net Pennsylvania more than 100 million dollars next fiscal year, though energy industry advocates dispute that claim. Acting Department of Environmental Protection Secretary John Hanger argues a tax can be imposed without choking off economic growth. "There is certainly a number of reasonable ways to impose a tax that will allow the industry to come here, to stay here and to be very profitable, while also contributing to the very important things that state government provides," says Hanger. Stephen Rhoads, the president of the Pennsylvania Oil and Gas Association, says the proposed 5 percent tax, as well as an additional 4.7 cent levy on every thousand cubic feet extracted, would discourage companies from drilling in Pennsylvania. Hanger says the tax is a common practice that is already in place in 39 other states.

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