Sturla unveils sliding scale tax plan on Marcellus Shale

HARRISBURG, Jan. 12 – State Rep. Mike Sturla is seeking support for his legislation that would implement a graduated severance tax on Marcellus Shale to fund pension obligations at state and local levels.

“The proposal is a fair approach that would capture much-needed funding for the commonwealth for one of our most valuable resources while providing a break to the industry when prices are down,” Sturla explained.

Sturla’s plan would tax natural gas at the following rates:

Tax rate           Gas value

4%                   $0-$.99/mcf
5%                   $1-$1.99/mcf
6%                   $2-$2.99/mcf
7%                   $3-$3.99/mcf
8%                   $4-$4.99/mcf
9%                   $5 and above/mcf

The legislation would exempt gas severed from a stripper well; severed from a storage field; and used within 5 miles of the well for manufacturing in Pennsylvania. Additionally, the current impact fee, post production costs and initial capital costs would be deductible from a severance tax liability.

Funds generated would be used to fund the unfunded pension liability before Act 120 of 2010 pension obligations for SERS and PSERS, unfunded municipal pensions and post Act 120 of 2010 pension obligations for local school districts and the state.

“There are myriad aspects of this legislation that have long-term benefits and impacts. I look forward to working with stakeholders to come to an agreement that provides a benefit to all involved,” Sturla said.