Davis unveils proposal for 8 percent severance tax on Marcellus gas

Plan would piggyback on impact fee, address education, budget crises

HARRISBURG, Feb. 9 – State Rep. Tina Davis, D-Bucks, today unveiled her proposal to address the commonwealth’s budget and education crises with an overall 8 percent severance tax on Pennsylvania’s $11 billion Marcellus shale natural gas and oil industry.

"Pennsylvania is the only major gas producing state not to tax production at the wellhead, and this corporate favoritism costs Pennsylvania dearly," Davis said. "It is time for producers to pay their fair share and provide fair funding for essential services for depleting this valuable resource."

Davis noted that this week marks the three-year anniversary of former Gov. Tom Corbett’s signing the disastrous Act 13 Marcellus shale drilling law and its paltry impact fee with an effective tax rate of 1.9 percent.

"My legislation would not affect the Act 13 impact fee or its distribution but build into it a warranted and sustainable revenue stream," Davis said. "Adding a 6 percent severance tax to the impact fee would raise substantial funding for our struggling public schools, including early childhood and basic education funding, as well as for the General Fund."

Davis said her measure would put Pennsylvania closer to the mainstream of what major gas-producing states require from the industry.

"My approach takes into account both the price of gas and the volume of the gas severed," Davis said in her co-sponsorship memo to House colleagues. "By using the value and volume approach, the effective rate is not affected by the short-term volatility of the market and will provide a steady stream of money to the commonwealth."

Davis said Gov. Tom Wolf is scheduled to give his budget address on March 3, and addressing the state’s $2 billion structural budget deficit is a must.

"A severance tax is crucial to restoring fairness to our property taxpayers, responsibility to our schools and sanity to our state budget and pension plans," Davis said. "Pennsylvania is blessed with natural gas reserves, but Pennsylvania and its taxpayers should benefit rather than be victimized from its extraction."