Showdown: Comparing PA Impact Fee to WV Severance Tax

Yesterday the Pennsylvania Public Utility Commission (PUC), the agency charged with keeping tabs on impact fee revenue from shale drillers (PA’s version of a severance tax), released the final numbers for impact fee revenues and disbursements in 2016 (see PA PUC Impact Fee Report: Revenue Down Again in 2016). Revenues were from the impact fee were down for the third straight year. And since politicians in Harrisburg are in the midst of budget negotiations and attempting to close a perennial gap in the budget, we have no doubt the hew and cry will go out, yet again, to enact a severance tax on shale gas and oil–either in addition to or on top of the impact fee. We’ve written about PA Gov. Wolf’s (and his fellow Democrats’) manifestly dumb idea of implementing a severance tax (see our numerous stories on the topic here). The new argument that will be used in Harrisburg is this: If we only had a severance tax, we wouldn’t experience as much of a decrease in revenue as we have with an impact fee. This post aims to debunk that claim. In fact, an impact is far superior to a severance tax (the tax “everyone has but us here in PA”). Why so? Because, as the numbers below show, PA’s decrease in revenue from an impact fee has been far less than the drop in severance taxes in other states, like West Virginia…

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