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Commonwealth Forum: Should Pennsylvania Enact 

a Natural Gas Severance Tax?

YES
Severance taxes are fees levied on the extraction of natural resources from 
the ground, such as coal, petroleum, and natural gas. Because of technology 
advances, Pennsylvania has become the second largest producer of natural 
gas in the United States over the last decade. However, we are the only major 
producer of natural gas that does not have a severance tax. Pennsylvania’s 
Independent Fiscal Office estimates that the tax proposal supported by Gov-
ernor Tom Wolf would raise $218 million dollars during the 2018–2019 fiscal 
year, with revenue growing to $420 million by 2022–2023.

Opponents of the severance tax support their argument with two major 
claims that don’t hold up to scrutiny. First, they state that the severance tax 
would increase the cost of natural gas to Pennsylvanians, thus hurting vul-
nerable populations that already have difficulty paying for electricity and 
heat. Data from the U.S. Energy Information Administration show that 
Pennsylvania is among the largest net exporters of natural gas in the coun-
try. States like New York, New Jersey, and Maryland rely on our imports, and 
newer pipelines are getting ready to ship more gas to other Mid-Atlantic and 
Midwestern states. In effect we are subsidizing natural gas being used in 
other states by not having a severance tax. What’s the sense in that? Oppo-
nents also claim that Pennsylvanians are already taxed enough. Ironically, 
the other four largest natural gas producers all have severance taxes: Texas, 
Oklahoma, Louisiana, and Wyoming. No one would call these states hotbeds 
of tax and spend liberalism. The other states adopted the severance tax for a 
reason: it shifts the tax burden from their citizens to consumers in other 
states. That just makes sense. So whether you support investments in new 
policy programs or cuts to the state income tax or local property tax relief, 
there is one thing we should all agree on: a severance tax on natural gas in 
Pennsylvania would benefit our citizens.

NO
Governor Wolf ran for election on the pledge to enact a natural gas severance 
tax in Pennsylvania. Since the beginning of his tenure, he has pushed to 



The Environment 173

implement the tax on gas producers in the state, but to no avail, and for good 
reason. Pennsylvania already has high corporate net income taxes, 9.99 per-
cent, and an impact fee, essentially a tax, on each new well drilled as enacted 
under Governor Corbett in 2012. According to the Pennsylvania Public Util-
ity Commission, gas companies have paid in excess of $1.4 billion in fees 
since 2012. This does not include corporate taxes. This money is then distrib-
uted across the state to drilling counties and municipalities, as well as dis-
tributed in smaller measure to nondrilling governments for use in defined 
programs such as tax reduction, social services, emergency preparedness, 
and environmental or infrastructure improvements. The Marcellus Shale 
Coalition estimates that the average nonconventional well produces about 
$310,000 in impact fees over an operation of fifteen years.

The state also allocates some of the impact fee to the Pennsylvania De-
partment of Environmental Protection, the Pennsylvania Fish and Boat 
Commission, and the Pennsylvania Emergency Management Agency. Every 
county receives a portion of the fee for recreation and conservation efforts. 
Some money is also dedicated to statewide environmental and infrastruc-
ture initiatives such as Growing Greener and water and sewer projects.

Gas drillers are subject to the personal income tax if they are registered 
as LLCs, Partnerships, or S Corporations. They also pay the sales and use tax, 
and the liquid fuels tax. In essence, natural gas companies are already paying 
a severance tax on drilling. Call it a fee, but a tax under any other name is 
still a tax.

For More Information

conservation Voters of PA (https:// www .conservationpa .org) is a 501(c)(4) 
political action committee dedicated to electing candidates for respon-
sible environmental stewardship in the state of Pennsylvania.

The Marcellus shale coalition (http:// marcelluscoalition .org) works with 
producers and supply chain companies in the Marcellus and Utica Shale 
regions to represent their interests to the public and policy makers.

Penn future (https:// www .pennfuture .org) is a nonprofit based in Harris-
burg advocating for clean air, water, and a healthy environment.

The Pennsylvania Public Utility commission (http:// www .puc .state .pa .us) 
balances the needs of consumers and utilities, regulates reliable utility 
service, and educates consumers about utility choices.

From Pennsylvania Politics and Policy: A Commonwealth Reader, Volume 2. Edited by
Michelle J. Atherton and J. Wesley Leckrone (Philadelphia, Temple University Press,
2019).




