Study: Pa. energy firms paid less in taxes than they said they did

April 27, 2011|By Angela Couloumbis, Inquirer Harrisburg Bureau

HARRISBURG - Amid ongoing debate over whether to tax natural gas extracted from the Marcellus Shale, a study by a liberal-leaning think tank says big energy companies, including drillers, paid less in state and local taxes than the industry has claimed.

The study issued Tuesday by the Pennsylvania Budget and Policy Center said 2008 data from the state Department of Revenue show the industry paid $38.8 million in state business taxes that year. That figure includes $17.8 million in corporate net-income taxes.

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That is below the industry's claims that Marcellus Shale drillers yielded about $1 billion in state and local tax revenue, said Sharon Ward, director of the Harrisburg-based center.

"There are tax benefits from these companies being in Pennsylvania," said Ward, "but they are nowhere near the exaggerated claims being made."

The center's study is based on data from 2008, when Marcellus Shale drilling was still in its infancy. Of the 4,192 wells drilled in Pennsylvania that year, only 195 were in the shale. Compare that with the end of last year: of the 2,755 wells drilled, slightly more than half, or 1,386, were Shale wells.

Given those facts, the ink was barely dry on the study when the industry offered its side of the story, complete with dueling studies highlighting the economic benefits of drilling for Pennsylvania.

Travis Windle, spokesman for the Marcellus Shale Coalition, said a recent Pennsylvania State University study showed Marcellus Shale drillers generated actually $785 million for the state last year. That figure includes corporate taxes, as well as income and sales taxes paid by employees. The study was funded by the coalition, an industry group.

Windle also noted that the Pennsylvania Budget and Policy Center's parent organization has a board heavy with big labor representatives.

"To suggest that our industry is not paying taxes, or enough taxes, is simply a canard," he said in an e-mail.

The center's study - and the industry's swift rejoinders - came as Pennsylvania legislators continue to wrestle with a fundamental question: to tax or not to tax the extraction of natural gas from the Marcellus Shale. Pennsylvania is the largest gas-producing state without such a tax.

Gov. Corbett campaigned on a promise not to raise or impose any new taxes, including ones on natural gas extraction. He has said he would consider a so-called "local impact fee," as long as any money raised went directly to the communities where drilling is taking place.

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