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Saturday, July 12, 2008

Tax On Gas Wells Would Be Bigger Than Gambling Revenues

Board supports tax on oil, natural gas

By JIM RUNKLE — jrunkle@lockhaven.com

Lock Haven Express

MILL HALL - The Keystone Central School Board has seen a lot of natural gas wells going up in central Pennsylvania, and believes some of that revenue should flow into the district's yearly budget via a property tax.

This week, the board voted unanimously to support submission of a "gas well property tax reauthorization" as a platform item when the state school board association lobbies the state legislature for changes in the laws.

The board also voted to recommend that the Clinton County Commissioners join that effort, since both the school district and county government would benefit.

According to Board President Jack Peters, the stakes are fairly high.

Peters said the district could gain yearly revenues of over $3 million if the law was changed.

According to the Unified Sportsmen of Pennsylvania, the new discovery of Pennsylvania's natural gas deposits is the most important event in the history of modern times in Pennsylvania.

Called the Marcellus Shale Gas Deposit, it is the largest in the nation, with a volume of natural gas estimated to be 200-500 trillion cubic feet.

The gas has a projected worth of no less than one trillion dollars, according to the USP report.

Peters and other local government officials say gas exploration companies are spending millions and expecting to make many millions more from natural gas trapped in the Marcellus formation - What's missing in the equation is a key tax on oil, natural gas and mineral removal.

The tax exists in other states but not in Pennsylvania, so companies and their landowner partners, are given a big pass.

In Pennsylvania, the landowner receives royalties from a well and pays taxes on that as ordinary income, and the gas company pays corporate income tax on the money it makes from the well.

What the district and other supporters are recommending is a tax on natural resources "severed" from the land.

Peters said an attempt was made some years back to create a tax on the natural resources, but the tax was overturned by the state's supreme court. Local taxing authorities eyeing a potential windfall are asking the state legislature to revisit the issue and come up with a taxing bill that will pass constitutional muster.

If the General Assembly follows through, a company with a well producing gas worth $400,000 a year would pay $20,000 of taxes with a severance tax of 5 percent.

The stakes are even higher when it comes to public lands owned by the state.

Pennsylvania owns more than three million acres of land, which is controlled by the Pennsylvania Department of Conservation and Natural Resources and Game Commission.

The potential revenue would dwarf the amount the state anticipates from its gambling revenue, and local governments that play host to that untaxable property are hoping is that the money from beneath the soil filters down to residents to offset property taxes, repair bridges and upgrade roads, sewers and water systems.

Legislation to reinstate the tax has been introduced.

House Bill 1373, sponsored by Rep. Bill DeWeese, D-Greene, the House majority leader, and cosigned by 25 lawmakers, including Rep. Mike Hanna, D-Lock Haven, would make the gas subject to taxation again.

Gas companies and associated professional organizations say any additional taxes will have an adverse impact on the amount they spend on developing new resources.

1 comment :

Anonymous said...

This is so wrong! We want to start drilling oil on American soil again, but now greedy people want the taxes hiked way up so as to profit from it. And what will that do drive down the price of oil? NOT A DARNED THING!! Get your heads outta your butts, people!