McGarrigle Proposes Severance Tax on Natural Gas Extraction

Harrisburg – State Senator Tom McGarrigle (R-26) today announced the introduction of legislation to enact a severance tax on natural gas extraction to fund public schools.

Under Senate Bill 519, the rate of the tax would be 4 percent of the gross value of the natural gas at the wellhead. The revenue would be deposited into the Severance Tax for Education Fund, which will be dedicated entirely to funding public education. The tax would not affect the current impact fee.

“This legislation represents a campaign promise kept, to dedicate revenue from natural gas extraction to public education, and to do so in a way that does not jeopardize this still fledgling industry in Pennsylvania,” McGarrigle said.

Senator McGarrigle’s major concern with Gov. Tom Wolf’s proposed severance tax is that the Governor’s 5 percent extraction tax also has an additional $0.047 flat tax that would increase the Governor’s plan at current gas prices to an 8 percent tax.

“At that high a level the industry would be forced to cut back on production, generating a further reduction in state revenue,” the senator said. “The plan needs to be one that allows the Marcellus Shale industry to survive and thrive. Our 4 percent tax is one that keeps Pennsylvania competitive in natural gas development and provides much needed revenue to our public schools.”

McGarrigle added that the state needs to provide support for this growing industry and address the lack of pipeline infrastructure in the shale gas region to move the gas to market. This is necessary to grow the job opportunities throughout the state increase revenue for public schools.

The bills was referred to the Senate Environmental Resources and Energy Committee.

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CONTACT: Alex Charlton (610) 853-4100