A fair and sound tax policy requires that people or businesses pay for the government they use, including the cost of extracting natural gas. Yet despite the passage of a natural gas “impact fee” nearly two years ago, a few lawmakers and government union bosses insist drillers still aren’t paying their “fair share.” For example, PSEA union president Mike Crossey joined House lawmakers today for a press conference promoting legislation to increase taxes on drillers.
In reality, gas companies are already paying for more government than they’re using, including an estimated $810 million in 2013 royalties to landowners, $500 million on road repairs, and billions in existing state taxes. In addition, gas drillers face the same tax climate common to every other Pennsylvania business, including the highest effective corporate income tax rate in the industrialized world.
Initially promoted as a way to compensate communities for the local impact of natural gas drilling, much of the $400 million in collected by the “impact fee” is funding broad programs that have little connection to natural gas drilling impacts, like the Commonwealth Financing Authority and Growing Greener.
Clearly, the primary goal of a new severance tax isn’t just to pay for the government the natural gas industry is using, but to line the pockets of special interest groups like Crossey’s PSEA and other government unions that profit off of bigger, more expensive government.
As long as the Marcellus miracle continues, those lobbying for government handouts will keep calling to increase the industry’s taxes and fees—which would effectively raise engergy costs across the state.
Those calls should be ignored because gas drillers are already paying for the costs of government they use, and more.