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Severance Tax on Marcellus Shale Natural Gas Industry

Severance Tax on Marcellus Shale Natural Gas Industry

March 28, 2014- Howard Ondick
LUZERNE COUNTY- Senate Democratic plan for a fair and reasonable severance tax on the Marcellus Shale natural gas industry in the commonwealth has been unveiled.

Senator John Yudichak of Luzerne County, unveiled the plan at a news conference yesterday at the Northeast Pennsylvania Industrial Resource Center (NEPIRC) in Hanover Township, Luzerne County.

Senator Yudichak today joined local leaders in education, environmental protection and business to unveil details of a plan to enact fair and reasonable severance tax proposal on the Marcellus shale industry.

 “In order to fully capitalize on the benefits of the Marcellus shale industry, we must have a comprehensive economic strategy in place – and that strategy needs to include a fair and reasonable severance tax,” Yudichak said. “Fair taxes mean better jobs, better education and better environmental protection; and a severance tax would level the playing field for all Pennsylvania businesses to grow along with the Marcellus shale industry and ensure that we do not have to make drastic budget cuts to important state programs every June.”

The plan would levy a new 5% tax on the extraction of Marcellus shale gas and the revenue generated by the tax would be used to fund education, protect the environment and stimulate the economy. It is estimated that the severance tax would generate $720 million in the first year alone.

 Under the proposal, education would receive the largest share of the revenue generated by the severance tax, with $375 million in FY 2014-15, growing to $453 million in FY 2015-16, and more than $1 billion by 2020 dedicated to education funding. All annual increases in tax and fee collections after FY 2015-16 would be dedicated to fund education.

Roughly $195 million of the revenue in FY 2014-15, and $250 million every year after that, would be used to fund DCED programs; make infrastructure investments; fund local economic development projects and implement new tax reduction incentives to improve the local business climate.

The proposal would also make significant investments in environmental protection with $75 million dedicated to Growing Greener programs and $75 million dedicated to replace the administration’s plan to allow Marcellus drilling near state parks and forest land in FY 2014-15. In FY 2015-16 and every year thereafter, the proposal would allocate $120 million for Growing Greener programs and $30 million for other environmental programs.

In addition to Senator Yudichak, Senator Judy Schwank of Berks County announced the plan at a news conference today in Reading and Senate Democratic Appropriations Committee Chairman Vincent Hughes of Philadelphia announced the plan at a rally at the Philadelphia School District Administration Building.

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