Pennsylvania Business Groups Punch Back Against Energy Tax Legislation

21 Aug Pennsylvania Business Groups Punch Back Against Energy Tax Legislation

Taxes have often been considered a contentious matter. Over the centuries, many Americans have sought to keep taxes to a minimum. The same is true today. Many legislators are aware of the need to balance taxes with revenues. In Pennsylvania, a new tax is attracting much commentary and a lot of criticism. Legislators are proposing to levy a specific tax on energy industries in the state. This tax will apply only to certain industries and not to other sectors of the economy. Those in the energy industry have made their thoughts known about it loudly to many observers and to the state legislators during the past few weeks. As the tax bill continues to wind through the legislative process, it is expected that lobbyists from both sides will continue to try and get it passed or to try and get it struck down.

A July Bill

The Pennsylvania tax bill was passed by the Senate after a long debate. Officials voted 26-24 to agree to have the tax in place on July 27th. This bill asks for roughly an additional $400 million annually in taxes on the energy industry. The bill will place a tax on the gross receipts earned from the natural gas and electrical industries. Officials are also calling for taxes on telecommunications receipts in the state. In addition, state officials are seeking roughly $100 million each year from the energy industry via an additional tax. This is in the form of a new severance tax that will apply to activities on the Marcellus Shale natural gas drilling. The bill was passed by a body that is controlled by the the Republican party. There were fourteen votes from the Republican majority. There were also an additional twelve votes as well from area Democrats who agreed with the need for the taxes on such industries. Officials from both parties supported the bill. They are expected to continue to do so as it goes to another Pennsylvania legislative body.

Spreading the Burden

While legislators supported the tax, other groups have come out against it. Gene Barr is the president of the Pennsylvania Chamber of Business and Industry. In his opinion, the tax proposal is poorly thought out and will not benefit consumers or state businesses. He believes that state officials are not acting in the public’s best interest with this bill. Barr also believes that this is not a good idea as it is a business-to-business tax that penalizes economic activity directly. He urges Pennsylvania lawmakers to think about other ways to help increase state revenues. He believes that it is better for state officials to look to innovative ideas that will help spread this tax burden evenly and thus avoid penalizing one industry and only one sector of the economy. He wants the legislators to be more cautious and to look at other issues the state also faces as well. In his view, state officials should be thinking about issues that include wider tax issues, labor laws, and civil litigation rules.

State Problems

The energy tax legislation is something that state officials will help them confront other issues have continued to cause problems in the state. Many state officials, including governor Tom Wolf, are worried about the long-term economic health of the state. He fears that without immediate action, the state will face problems with basic funding for many services. The current state budget is thirty two billion dollars. The budget has a gap that exceeds two billion. The gap must be filled. Officials are looking for ways to help plug that gap and avoid potentially serious fiscal problems that may otherwise cost the state in the long-term. He fears that without this tax, state officials may be forced to declare bankruptcy. Such an action would gravely harm many municipalities and even threaten the schools. The governor thinks this bill is one that bipartisan and provides a compromise that should satisfy both sides.

Awaiting Further Action

After the bill passed the senate, the next step is passing the Pennsylvania state senate. Industry officials are fully prepared to do all they can to help convince legislators to consider other means of taxation. Terry Fitzpatrick is one opponent of passage. As the president of the Energy Association of Pennsylvania, he urges state officials to rethink this idea. He represents a trade group of electric and gas utilities. He believes that the passage of this bill ks not a good idea. In his opinion, this bill will increase the money that residents of Pennsylvania pay for their energy bills.

Severance Tax

Some people in the state have also argued that state officials should consider imposing a severance tax that would be placed on natural gas drilling in the state. Such a tax would be in addition to an existing impact fee. This fee is earmarked for those communities where companies are drilling. This particular impact fee has been one that has helped generated over $1.2 billion in revenues for the state since 2012. More than $173 million was raised last year alone. That tax was also opposed by industry groups. They are looking to have it repealed as well as avoid any new energy taxes.

Attracting Industry

Many business groups in the state believe that this bill will hurt their industry’s competitive standing in the local and global markets. They also fear that the bill in question will ultimately trigger much higher bills for consumers. They worry that it will frighten away investment in the energy sector of the economy. Senate Republican lawyer Drew Crompton does not believe such suggestions to be true or accurate. In his opinion, action is needed to make sure that the state of Pennsylvania remains on firm fiscal footing. He believes that it is better for state officials like himself and those in his party to look at new ways to make sure the state has the revenues it needs to fund all that residents here need. The tax bill now faces strong opposition from state Republicans.

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