According to a Wall Street Journal article written on September 29, 2010, Pennsylvania is coming closer to passing a bill that will tax the extraction of natural gas. Pennsylvania is the only state that produces large amounts of gas without a tax. The debate over provisions to include in this bill is very divided. The governor of Pennsylvania, Ed Rendell, wants the gas companies to pay for environmental protections and infrastructure improvements, and “replenish the state’s depleted coffers” (WSJ). On the other side of the argument, Republicans are resisting the bill. Many of their favored policies include allowing companies to use mineral rights in an area if a certain percentage of people has agreed to it, and a lower tax than the democrats are proposing, at least in the beginning. At this point the bill has passed in the house, but politicians are expecting difficulty because the senate is Republican controlled.
This current event is not entirely political, though. It also shows a lot about the growth of the natural gas industry. Again, according to the Wall Street Journal Article, Pennsylvania’s output of natural gas has quadrupled since 2009. This is a massive increase in only a year. The house’s bill would tax 39 cents per thousand cubic feet of gas. This would raise $120 million in 2010 and $326 million in 2011-2012 (WSJ).
The main objective of this bill, I believe, is to pay for more state projects like infrastructure. I do not mind the Pennsylvania government taxing these gas companies so that it can pay for the environmental protections and infrastructural improvements. However, I believe that this measure crosses the line when the Governor hopes that this tax revenue can “replenish the state’s depleted coffers” (WSJ). It seems wrong to have gas companies paying for budget shortfalls of the government. Not only does it seem wrong, but it will, without a doubt, drive up the cost of natural gas. This industry is growing rapidly, but this could be happening because of the relatively low price of natural gas. Overall, I am for a bill that will tax natural gas in Pennsylvania. These companies should pay for their environmental protections and pay their fair share. I just would prefer that the government does not tax this young industry too heavily so it can continue its rapid growth.
Day, Matt. "Pennsylvania House Passes New Natural-Gas Production Tax." Wall Street Journal (2010) Web. 29 Sep 2010.
I think Governor Rendell's quote might seem shrewd, but at least, it seemed as if he was being honest. Taxes are there so that government can support itself. Government does not work for profits either, so it inherently has deficits. I believe that government does have the right and should tax the natural gas companies. But, you are right. Government cannot tax this rather legitimate and thankfully domestic industry to its death.
ReplyDeleteI have to agree with you John; the cost of natural-gas is already high enough and if it is taxed the prices will just go through the roof. I do not think that citizens of this country want to pay a cent more for gas, it is just getting too expensive. The government has so many other opportunities and ways to fund money in creating more infrastructure if they really need it.
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