Contact Information 

District Office
1555 Highlands Drive
Suite 110
Lititz, PA 17543
Phone:  (717) 626-1776
FAX:  (717) 626-4234

Capitol Office
51A East Wing
PO Box 202097
Harrisburg PA 17120-2097
Phone: (717) 787-1776

E-Mail:  
smentzer@pahousegop.com

Responsible Severance Tax Legislation Worth Consideration
1/29/2016
In three weeks, Gov. Tom Wolf will make his annual budget address to the General Assembly. A natural gas severance tax is among the many items that the governor is expected to discuss during his address. During budget discussions throughout the past year, the governor has consistently attempted to include a higher Personal Income Tax and sales tax on hard-working, middle-class families. His proposed broad-based tax hikes were defeated by bipartisan majorities in the House of Representatives.

There may be some room for additional discussions and common ground when discussing a severance tax on natural gas. The General Assembly must approach the issue responsibly, recognizing the reality of the natural gas market.

Natural gas and crude oil prices have plummeted recently on the commodities exchange. Prices on these natural resources have been declining steadily over the past year. In Pennsylvania, prices are well below the “break-even” price of production. For months, natural gas drilling companies have laid off thousands of employees on their Marcellus Shale rigs and have significantly curtailed their capital investment for future wells in the Commonwealth.

Gov. Wolf originally proposed a 5 percent severance tax rate in addition to charging a fee of 4.7cents per thousand cubic meters on natural gas production. His proposal amounted to an effective tax rate of over 7 percent. That high of a severance tax rate, in addition to Pennsylvania’s extremely high corporate net income tax rate of 10 percent would have left us with the highest severance tax of the three natural gas producing surrounding states.

I believe severance tax legislation must have a responsible and less punitive tax rate than what the governor proposed. Pennsylvanians deserve to share in the bounty of our vast natural resources, but we should encourage continued growth of the natural gas industry in our state, not tax it to death.

As discussions continue on this issue in Harrisburg, I will continue to keep an open mind and watch for ways to support a bipartisan and responsible severance tax.

By State Rep. Steven Mentzer (R-Lititz)

Representative Steven Mentzer
97th Legislative District
Pennsylvania House of Representatives
Media Contact: Eric Reath
717.260.6187
ereath@pahousegop.com
RepMentzer.com / Facebook.com/RepMentzer
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