Pennsylvania’s Fossil Fuel Tax Revenue Lags Far Behind Other Energy States, Report Says

Pennsylvania's natural gas, coal, and petrochemical industries are taxed too little, failing to boost the state's economy or address growing budget deficits, according to a new analysis. The report, published by the think tank Keystone Research Center, argues that the state's low tax rates on these industries, particularly the "impact fee" on natural gas extraction, are insufficient compared to other energy-producing states. For instance, Pennsylvania's severance tax on natural gas is effectively 0.7%, while states like Colorado and Wyoming have rates exceeding 5%. This low tax revenue has not translated into economic benefits, as the fossil fuel sector has seen declines and has not created the promised jobs or provided consistently cheap energy, the analysis states. The Keystone Research Center's findings contrast with the industry's perspective, which claims it has supplied jobs and affordable energy to the state. The report highlights that Pennsylvania's reliance on these industries, coupled with low taxation, has contributed to the state's fiscal challenges. The analysis suggests that increasing taxes on the fossil fuel sector could generate significant revenue to address budget shortfalls and invest in other economic sectors. The report specifically points to the "impact fee" as a primary example of inadequate taxation, noting that it has not kept pace with inflation or the industry's profitability. The findings are based on an examination of state tax policies and economic data related to the fossil fuel sector over the past decade.