Reed Responds to Wolf 7.5 Percent Severance Tax Proposal

HARRISBURG – House Majority Leader  Dave Reed (R-Indiana County) issued the following statement regarding Gov. Tom Wolf’s announcement of his severance tax proposal today.

“While the governor’s 7.5 percent natural gas severance tax proposal should not surprise anyone, we all need to remember, there is no ‘free money.’

“By adding 4.7 cents for each 1,000 cubic feet on top of the 5 percent on the value of the gas, the governor is, in actuality, pushing roughly a 7.5 percent effective tax rate – one of the highest in the nation. In fact, of the top natural gas producing states, only Texas taxes at this rate, and comparatively, they don’t have a corporate tax like Pennsylvania. 

 “A comparison to West Virginia isn’t exactly fair either. Their corporate tax rate is just 6.5 percent, compared to our 9.9 percent rate. Its energy production and job growth has slowed compared to Pennsylvania – possibly due to the higher tax. Their unemployment rate stands at 6.3 percent, compared to our 4.8 percent. 

“Taxing questions cannot be discussed in a vacuum. When the governor divulges the full details of his plan, we will evaluate his policy on the merits and will have, and the public deserves, a full and fair discussion of Pennsylvania’s tax structure compared with other states.

“Unfortunately, the cost of doing business in Pennsylvania is one of the highest in the nation, and we have been working to reduce those costs and encourage job creators come to Pennsylvania. Increasing those costs might not be the best message.

“The natural gas industry has helped drive the state’s unemployment to its lowest rate in nearly seven years and added billions to our economic activity.  

“The real question becomes what impact such a high tax rate would have on job creation throughout the state.”