Report: Pennsylvania drilling taxes among lowest

Published on NewsOK Modified: March 21, 2014 at 12:40 pm •  Published: March 21, 2014
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PITTSBURGH (AP) — Pennsylvania's taxes on the natural gas drilling boom are among the lowest in the nation, according to a new report from a nonpartisan office of the state Legislature.

Pennsylvania is the only state with significant production that doesn't impose a severance tax based on the volume or market value of gas produced, the figures released Thursday by the Independent Fiscal Office found. Instead, the state imposes an impact fee for each well drilled, no matter what it produces.

The report looked at 11 states and found that a Pennsylvania well that began producing in 2014 will be taxed at an effective tax rate of at most 1.6 percent. By comparison a similar well in West Virginia will be taxed at 7.2 percent, a Texas well at 4.6 percent, a Colorado well at about 5.6 percent, and Ohio at 1.8 percent.

Under some scenarios, such as high production, Pennsylvania's effective rate falls to under 1 percent.

The Marcellus Shale Coalition, an industry group, said the analysis is flawed because it doesn't include other factors, such as corporate taxes. The coalition said in a statement that "those who oppose shale development will inevitably seek to leverage this flawed analysis as a rallying cry, based purely on politics rather than objective facts."

The coalition noted that Pennsylvania has the highest corporate income tax rate among energy-producing states, while Ohio and Texas don't levy such taxes.



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