The Worst “Subsidy” Study You’ll Never Read

The radical environmentalist group and corporate welfare lobbyist PennFuture has updated an absurd study about the “subsidies” Pennsylvania taxpayers pay for fossil fuels. While we oppose subsidies for any industry, most of PennFuture’s “subsidies” are the absence of higher taxes on consumers.  

PennFuture’s analysis show less than $60 million in actual direct subsidy for fossil fuels (some of which is for alternative energy programs). What they consider a “subsidy” is not taxing certain goods and services.

Most of their “subsidy” total comes from not applying the sales tax to gasoline and electricity. That is, taxpayers would “save” by paying more in sales tax at the pump and in their heating bills.

But wait, you must be thinking, don’t we have a gasoline tax and an electricity tax?

Why yes, yes we do. They are claiming we are subsidizing gasoline by taxing it, but not taxing it twice.

  1. Almost 44 percent of these “subsidies” are for NOT imposing the sales tax on gasoline. Yet gasoline is taxed separately under the Oil Company Franchise Tax. In fact, as of 2015, Pennsylvania has the highest state gasoline tax in the nation.

    Gasoline is exempted from the sales and use tax for that reason and that reason alone—it doesn’t make any sense to double-tax a product. To suggest state taxpayers are “subsidizing” gasoline production by imposing a tax on gasoline (but not two taxes) is beyond ridiculous.
  2. Another 20 percent of these “subsidies” are for not imposing the sales tax on electricity and heating fuel. Again, these utility bills are taxed separately under the Gross Receipts Tax. Making consumers pay another tax on their electric bill or heating bill does not repeal a subsidy, and in certainly doesn’t save taxpayer.

Both of these tax exemptions—making up almost two-thirds of PennFuture’s estimates of “subsidies”—suggest we should impose taxes on top of taxes on consumers at the pump or in their utility bills. Either PennFuture doesn’t understand how taxes work, or are deliberately misleading their readers, but either way, they what they are suggesting is higher taxes on families.

Other “subsidies” include not taxing the government for its use of fuel (because we don’t tax the government for anything) and not imposing property taxes on the value of natural gas. This is a tax that would hit homeowners; it is not a subsidy for the businesses.

PennFuture seems to have no idea what a subsidy actually is. Ironically, they are lobbying for new subsidies, specifically $225 million in subsidies for alternative energy under Governor’s Wolf budget proposal.

Worse yet, these subsidies will come from borrowed dollars. Governor Wolf wants to borrow funds and pay it back (with interest) using a new tax on natural gas severance. In other words, PennFuture not only wants to double-tax fossil fuels, they want to place a special tax on natural gas to subsidize cronies in the wind and solar power industry.

It’s clear that these subsidization schemes not only punish taxpayers, but fail to create jobs. Pennsylvania continues to see anemic job growth, despite $2.9 billion in taxpayer-financed alternative energy loans and grants since 2003.