Severance Tax Not a Panacea After All – Down 50%+ in 2015

There’s been a lot of talk over the past 5+ years in Pennsylvania that the state needs a severance tax. We’ve heard the repeated drumbeat that “eeeevvvvery other oil and gas state has a severance tax and we need one too.” A severance tax would, according to sticky finger Democrats and teachers unions, instantly solve funding shortfalls for education. Bam–solved. It would also fund a variety of “worthy” programs that the beneficent politicians in Harrisburg salivate to fund. A severance tax might even be the cure for cancer–who knows? Just one teeny, tiny problem. With the collapse of prices for oil and gas, and the resulting collapse in drilling, all of those “other states” with a severance tax are now scrambling to make up the difference in the shortfall they face in their own budgets. Turns out a severance tax isn’t a panacea after all. It also turns out an impact fee (PA’s equivalent of a severance tax), while sure to go down, will go down a lot less than a severance tax would. To our PA friends: Are you still happy you traded Tom Corbett, who was smart enough to create the impact fee, for the inept Tom Wolf who’s chasing a St. Elmo’s Fire severance tax? Here’s a look at the rapid fall of severance taxes in key oil and gas states in 2015, by the experts at the U.S. Energy Information Administration…

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