McGarrigle proposes severance tax on natural gas companies
Republican state Senate candidate Tom McGarrigle unveiled his plan to raise state education funding by levying a severance tax on natural gas companies.
McGarrigle said implementing a 4 percent severance tax on natural gas will generate $1.6 billion in new state revenue over the course of two years. The tax would raise $709 million in its first year and another $887 million in its second.
All of the funding would be devoted to public education, McGarrigle said. The revenue also would be required to supplement – not replace – existing education funding sources.
“There is broad support from residents across Pennsylvania to create a severance tax on natural gas drilling companies,” McGarrigle said, who also is the chairman of Delaware County Council. “The difference with my plan is the entire 4 percent tax will supplement existing funding for basic education. That means more money being spent in classrooms to educate students.”
McGarrigle, of Springfield, is running against Democrat John Kane, of Ridley Township, for the open seat in the 26th Senatorial District. The seat is being vacated by retiring Republican state Sen. Edwin “Ted” Erickson, of Newtown.
Pennsylvania has the lowest effective tax rate on natural gas drilling companies among 11 states in the region, according to a study released last month by the state’s nonpartisan Independent Fiscal Office. Pennsylvania has not levied a severance tax, but has enacted an impact fee.
McGarrigle’s proposal would maintain the impact fee while also imposing a severance tax on Marcellus Shale drilling companies.
“We don’t want to overtax them and drive them out of Pennsylvania, but they need to pay their fair share,” McGarrigle said.
State Sen. Vincent Hughes, D-7, of Philadelphia, announced last month that he plans to introduce legislation to levy a 5 percent severance tax. His proposal would generate $720 million in its first year and earmark $375 million to education funding.
McGarrigle said he would back any plan that raises education funding by taxing natural gas companies.
“We should get behind good ideas, whether they’re from a Democrat or a Republican,” McGarrigle said. “School districts need more funding to educate these children. Whoever provides it – we should look for good ideas.”
Kane, the business manager of Plumbers Union Local 690, also supports levying an extraction tax on natural gas companies.
“I want to applaud Tom for standing with me and the Senate Democrats on the issue of adequately funding education by proposing a modest tax on natural gas extraction,” Kane said in a statement. “I’m glad that we both can bring support and publicize this idea, which has broad support among Delaware County residents.
“My only hope is that as the campaign progresses, my opponent continues to stand up for the interests of Delaware County instead of the interests of his party.”
Gov. Tom Corbett, a Republican seeking re-election, has opposed implementing a severance tax, arguing it would deter investment.