Taxation: Fourteen of the 15 leading gas-producing states impose taxes on extracted resources. Texas, for example, has long maintained a 7.5 percent tax on natural-gas extraction, and such severance taxes provide nearly a tenth of the state's revenues. Former Alaska Gov. Sarah Palin became a national figure after she secured support for the nation's most aggressive energy severance tax five years ago. Such taxes have long-standing bipartisan support in Texas, Alaska, and most of the other states that produce natural gas.
Surveys confirm that the Keystone State's citizens strongly support the idea, too. But Pennsylvania has established itself as the only major gas-producing state without such a tax. It reaffirmed that unique position with the new law, which gives counties the option of imposing an "impact fee" on gas drillers.
If instituted, these fees would likely produce far less revenue than the most modest severance taxes. Moreover, local governments can adopt fees only through a complex process, and they will invariably encounter pressure to avoid them. And though local officials have to establish the fees, the state would collect the money and keep a large portion of it, further discouraging local participation.
Pennsylvania's leaders are betting that the absence of a tax and the strong disincentives to impose fees will further fuel development of a resource that is already being exploited aggressively around the state and the nation. No other state has placed such a bet, making the commonwealth an intriguing test case.
