DiGirolamo, Murt Propose Drilling Tax in Pennsylvania
HARRISBURG – In an effort to ensure fairness within the state’s deep natural gas industry, Reps. Gene DiGirolamo (R-Bucks) and Tom Murt (R-Montgomery/Philadelphia) have unveiled a proposal to implement a drilling tax in Pennsylvania.

Both lawmakers see this measure as a compromise among the various pieces of legislation seeking to institute a severance tax or an impact fee on deep natural gas within the state’s Marcellus Shale formation.

“One of the largest concerns about the natural gas companies that have taken advantage of large natural gas deposits in our state is that they’re not paying their fair share,” DiGirolamo said. “Pennsylvania is the only major natural gas-producing state in the nation that does not have a tax or fee levied on natural gas extraction. As a result, many taxpayers feel they’re shouldering more of the tax burden than they should. This legislation is designed to level the playing field.”

Overall, the tax being proposed in the new legislation would help provide financial support to a number of items that have taken drastic budget cuts in recent years. The tax revenue would be broken down into three areas: 

        • 28 percent to local governments. 
        • 28 percent to environmental programs. 
        • 44 percent to state government.

The tax - to be set at 4.9 percent - is estimated to generate $362 million during the 2012-13 fiscal year and rise to $562 million annually within five years. This rate is lower than neighboring West Virginia, where the industry is also thriving.
Those programs that would be targeted to receive revenue would include statewide environmental programs, hazardous site cleanup programs, local municipalities (those that both host drilling sites and others), affordable housing, conservation districts, education, job training, transportation infrastructure and human services.

“Natural gas is a key to energy independence,” Murt said. “But we must make sure the communities that host drilling sites are compensated.”

The tax – to be set at 4.9 percent – is estimated to generate anywhere between $350 million and $500 million annually. This rate is lower than neighboring West Virginia, where the industry is also thriving.

DiGirolamo cited several state public opinion polls in which most Pennsylvanians support a tax, which would represent a very small fraction of the profits the natural gas drilling companies are enjoying.

“The industry here in Pennsylvania is comprised of many out-of-state companies that are paying a drilling tax in other states,” DiGirolamo noted. “These companies expect to pay a tax, and we want to make sure that whatever tax is imposed is as fair as possible.”

The lawmakers also noted their proposal meets the following criteria: it’s fair and reasonable to the industry; it will sustain the growth of the industry and be comparable to rates in other states; it assists host communities and helps with job creation, social and environmental costs and impacts; it makes long-term investments in natural resources and environmental programs, along with the economy and human capital; it strengthens the Commonwealth’s safety net for times of need; and it makes sure every citizens can benefit from development in the Marcellus Shale.

The lawmakers are currently in the process of seeking co-sponsors for the bill.

State Representative Gene DiGirolamo
18th District, Pennsylvania House of Representatives


State Representative Tom Murt
152nd District, Pennsylvania House of Representatives


Contact: Jennifer Keaton