While I wouldn’t say this for all of Pennsylvania’s systems of taxation (many of which are convoluted), I do think that our state could be a case study for effective taxation as it pertains to the natural gas impact fee.
The impact fee is notable for a few reasons: 1) It is easy to understand; 2) The distribution formula is fair and unbiased; 3) You can easily track how the money is distributed; and 4) It actually does what it was designed and intended to do.
Over a decade ago, when lawmakers were debating how to tax the emerging natural gas industry, they could have just passed a severance tax (as most other states have done) and had the revenues go into the black hole that is the state’s General Fund. It would have been an easier political lift and given lawmakers another stream of revenue from which to pay for pet projects. But instead, they chose the path less traveled.
The impact fee is straightforward and transformative. The annual revenues directly benefit residents throughout the state via the distribution to county and local governments and through statewide environmental programs. The way the impact fee is structured ensures that the value of Pennsylvania’s vast natural gas resources is truly felt statewide.
Pennsylvania’s impact fee is a case study in effective and efficient taxation, and it should be promoted as such.
Jeff Smith
Butler