House committee approves severance tax legislation
By Jennifer Shockley | June 26, 2009 | 2 min. read
HARRISBURG, PA — The House Environmental and Energy Committee has approved legislation that would levy a five percent natural gas extraction tax on producers that sever the gas.
House Bill 1489 (George, D-Clearfield) limits the tax to high-producing wells and would not apply to wells producing 60,000 standard cubic feet a day or less. The severance tax is expected to generate roughly $600 million annually for state coffers by 2013-14.
An amendment adopted by the Committee allocates the revenue as follows:
- 15 percent to the Environmental Stewardship Fund;
- 2 percent each to the Pennsylvania Fish & Boat Commission and the Pennsylvania Game Commission;
- 4 percent to the Hazardous Sites Cleanup Fund;
- 5 percent to the Liquids Fuel Tax Fund for maintenance and reconstruction of roads and bridges;
- 4.5 percent to municipalities where drilling is taking place;
- 4.5 percent to counties where drilling is taking place;
- 3 percent to the Department of Welfare for the Low Income Home Energy Assistance Program; and
- 60 percent to the General Fund.
The severance tax proposed in House Bill 1489 is identical to the one currently in force in West Virginia. Nearly all states with significant gas deposits assess a severance tax. Pennsylvania is 15th nationally in natural gas production, and the 14 states with higher gas production all assess a severance tax or conservation fee.
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