DiGirolamo Applauds Committee Endorsement of Severance Tax
HARRISBURG – Legislation to impose a natural gas severance tax in Pennsylvania has passed the House Finance Committee and is being forwarded to the full House for additional consideration, said Rep. Gene DiGirolamo (R-Bucks), sponsor of the proposal.

“For the past several years, I have been working cooperatively with a lot of stakeholders and lawmakers on both sides of the aisle to develop a commonsense, reasonable severance tax,” DiGirolamo said. “Today was a monumental step forward in making sure that the industry pays its fair share and ensuring that we have a way to raise recurring revenue for important programs, such as human services and education.”

House Bill 1401, as amended by the House Finance Committee, would levy a severance tax at an incremental, market-driven rate based on volume at extraction. The tax would apply to unconventional gas wells that are also subject to the state’s impact fee. The rate would start at 2 cents per thousand cubic feet of natural gas if the price is not more than $3 and increase to a maximum of 3.5 cents if the market price is greater than $5.99.

The severance tax would not apply to natural gas used by a lessee or on shallow wells. The tax would also be prohibited from being passed along to the landowner, lease holder or other property owner.

Proceeds would be distributed to the state’s General Fund.

“I’d like to thank my Bucks County colleague, Rep. Bernie O’Neill, for his work in developing a responsible proposal that was agreeable to the committee,” DiGirolamo added. “This cooperation shows that good public policy can be achieved.”

DiGirolamo said the drilling tax would be far more sustainable than an impact fee alone. Under the current impact fee, each well is assessed a fee which declines over time for the first 15 years of operation. All unconventional wells drilled each year, no matter how much natural gas is produced, pay the same fee.

“Any drilling tax proposal we consider must be sustainable for future years, and by adding to the current impact fee, we can ensure that funding is available for our most critical needs,” he added. “This severance tax will not kill the natural gas industry or the thousands of jobs it has created. The natural gas isn’t going anywhere and will help position our Commonwealth as a responsible leader in energy production.”

Pennsylvania, one of the largest producers of natural gas in the nation, is the only major gas-producing state that does not impose a drilling tax.

Representative Gene DiGirolamo
18th District
Pennsylvania House of Representatives

Media Contact: Jennifer Keaton
GeneDiGirolamo.com / Facebook.com/GeneDiGirolamo