More Details about Proposed Ethane Cracker Tax Break

Some more details about how the tax break would work that Pennsylvania Gov. Tom Corbett is planning to offer Shell to build it’s ethane cracker plant in PA:

The [Corbett] administration wants to offer a Pennsylvania Resource Manufacturing Tax Credit starting in 2017 to promote the use of ethane, said state Revenue Secretary Dan Meuser who is involved in the Shell negotiations.

The tax credit would be capped at $66 million a year and go initially to the Shell cracker plant. The cracker plant won’t be eligible for the tax credit until it produces a threshold of 85,000 barrels of ethane daily, Meuser said.

Under the proposal, Shell could eventually apply to the state Department of Community and Economic Development to sell parts of the tax credit to Pennsylvania companies buying its ethane for use in their manufacturing processes. State officials anticipate that two dozen manufacturers producing products ranging from tires to diapers will locate near the plant and its ethane supplies and, thus, be eligible to share in the tax credit.

The credit will reduce the amount of the state corporate taxes that a company would pay.

One goal of the tax credit is to ensure that Pennsylvania-produced natural gas is used at the Shell cracker plant rather than gas shipped in from other states, Meuser said.

On a larger scale, the goal is to develop a petrochemical industry in Pennsylvania.

"These (spin-off) companies alone are probably worth the investment," Meuser said.

Shell plans to locate in a state Keystone Opportunity Zone so it would also get long-term breaks on local taxes as well.*

It’s no surprise that partisan, anti-drilling groups like PennFuture and the Pennsylvania Budget and Policy Center are against the tax break (and against the ethane cracker plant project in general).

Media accounts of the proposed tax break almost always mention both of these groups’ opposition, quoting them as some independent, non-partisan source. Not so. They are both highly partisan and highly anti-drilling—you need to know that as you read press accounts of the so-called debate “raging” over the tax break.

*Wilkes-Barre (PA) The Citizens’ Voice (Jun 11, 2012) – Proposed tax break for Shell gas ‘cracker’ plant prompts debate