May 25, 2010--Last night, the Pennsylvania House Appropriations Committee -- on a straight party line vote, with only Democrat support -- amended into a bill (HB 325) related to volunteer firefighters' tax status a $330 million tax increase.   House Democrat leadership is trying to fast-track this bill for a vote on Tuesday night or Wednesday morning, even though some of the proposals have yet to be publicly debated by the House.

HB 325 would impose a severance tax of 8% of value plus 7 cents per thousand cubic feet, on natural gas extraction, giving Pennsylvania the highest comparable severance tax rate in the nation.  The majority of states with a natural gas severance tax also delay implementation, offer tax exemptions, or discount the tax in hard-to-drill areas (like Marcellus Shale) to encourage drilling.  For example, Texas and Arkansas reduced their severance taxes for high-cost gas wells by nearly 80%.

The House Democrats' proposal is higher than Gov. Rendell's proposed 5% tax on value plus 4.7 cents per thousand cubic feet.  "Gov. Rendell's proposal was already economically detrimental to the development of this clean, affordable, and safe energy source, but the House Democrats' irresponsible actions last night just doubled-down on bad economic policy," said Matthew J. Brouillette, president of the Commonwealth Foundation.  "Instead of finding a way to curb their over-spending habits, they have unfairly targeted one of Pennsylvania's greatest economic opportunities for job creation and prosperity in decades."

The legislation would also impose a new tax on smokeless tobacco, and would raise the cigarette tax another 30 cents per pack.  The smokeless tax would also harm Pennsylvania's tobacco industry - most notably small farmers, including Amish and Mennonite - another growing sector (indeed, Pennsylvania is one of the only states where tobacco farming is expanding).

Based on the Pennsylvania State Tax Analysis Modeling Program (PA-STAMP), designed by economists at the Beacon Hill Institute at Suffolk University, the Commonwealth Foundation estimates that these tax increases will result in 4,200 fewer private sector jobs in Pennsylvania next year alone. 

ACTION STEPS:

1. Please sign the petition for a "Taxpayer's Budget" ... and forward this email to friends, family, and coworkers and encourage them to sign it, too.

2. Contact your state legislators and urge them to support a "Taxpayer's Budget" that meets three criteria: Reduces taxes on working Pennsylvanians and job creators; eliminates corporate welfare, WAMs/pork-barrel projects, and special interests spendin; and balances the budget without accounting gimmicks, shell games, or new debt.

3. Write a letter-to-the-editor urging the General Assembly and the Governor to adopt a "Taxpayer's Budget."

REMEMBER: The Commonwealth Foundation will crown one Pennsylvania resident the 2010 Grassroots Champion, and award that person $500. For details on how to qualify, click here.  

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Click here for more information on the Pennsylvania State Budget.

The Commonwealth Foundation (CommonwealthFoundation.org) is an independent, non-profit public policy research and educational institute based in Harrisburg, PA.