Shale Daily / NGI All News Access

Pennsylvania Democrat Proposes New Marcellus Tax

Proposals to tax production of the Marcellus Shale continue to pile up in Pennsylvania.

State Sen. Jim Brewster, a Democrat from southwest Pennsylvania, recently announced plans to introduce a 7% tax on natural gas extraction to fund education, environmental programs and local government infrastructure projects.

Brewster said his proposal, which has not yet been introduced, would be modeled on a bill that passed the House in late 2010 but stalled in the Senate and ultimately died after the midterm elections (see Shale Daily, Oct. 22, 2010).

The primary difference, Brewster said, is that his bill would fund education cuts proposed in the current budget, and would offer tax credits to operators that hire local workers and invest in community projects like parks and libraries.

Those credits could reduce the tax rate to 5%.

Brewster estimates that his proposal would raise $280 million per year, half going to education and the remainder split between environmental protection programs, including a special emergency account, and local governments.

Brewster said he also plans to introduce legislation creating a mandatory training program for well-site workers.

At 7%, Brewster's proposed tax rate is higher than the 5% to 6% proposed by other state lawmakers (see Shale Daily, May 5; April 19). Pennsylvania Gov. Tom Corbett has already pledged to veto any legislation that would increase general fund revenues by taxing natural gas production, but is open to discussing an "impact fee" used to help local governments, such as the one proposed by Senate President Pro Tempore Joe Scarnati (see Shale Daily,April 29).

Brewster represents a district in southwest Pennsylvania that includes Allegheny County and neighboring Westmoreland County. Although Allegheny, home to Pittsburgh, has seen little drilling so far, Westmoreland to the east produced 4.3 Bcf during the second half of 2010, making it one of the top producing 10 counties in the state.

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