The Daily Item, Sunbury, PA

Editorials

October 1, 2010

Will taxation protect natural resources?

There is broad consensus in Pennsylvania that drillers ought to be taxed for the right to come in and profit by extracting natural gas from under our ground. How tightly we ought to squeeze the drillers is open to debate.

A measure passed in the state House that would tax drillers at a rate of about 10 percent goes too far.

Those in the gas industry will protest any tax, but even they, in their heart of hearts, understand that the practice will be subject to some sort of government levy. Pennsylvania is the only state out of 30 that produce natural gas that does not already have a severance tax.

A severance tax could help cover the cost of protecting our natural resources, repaving roads and making other improvements required to cope with the growth of the natural gas industry.

An industry lobbying group says the proposed tax would double the rate in in West Virginia, which is currently the highest in the nation.

We love being No. 1, but we ought to seek primacy in something other than job-killing taxes.

At the heart of the problem is that legislative leaders see the gas tax as a cash cow that can be milked for all its worth without alienating constituents, particularly those in the more populated portions of the state.

Government estimates indicate that the gas tax could bring in $300 million in the first year and almost double that amount within four years.

The final House bill directs 60 percent of the revenue to municipalities and environmental cleanup programs, while 40 percent would go toward plugging a hole in the state general fund.

State Sen. Jakes Corman recently estimated that the budget deficit facing the commonwealth could approach $4 billion once stimulus funding evaporates.

The severance tax, even at the inflated rate proposed by House Democats, will provide less than 6 percent of what is needed to close the budget deficit. Republicans in the state Senate say the House’s version of the severance tax will not fly. That is good news. None of us will be well-served by a blind money grab that risks crowding out the most promising economic development in years.

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