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Potential Pennsylvania Economic Impacts of Natural Gas Tax/Fee Proposals, 2011–2015

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Presentation made in Harrisburg, Pennsylvania, by Rose Baker & David Passmore (Penn State) at Regional Economic Models, Inc., Seminar held on May 18, 2011

Published in: Business, Technology
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Potential Pennsylvania Economic Impacts of Natural Gas Tax/Fee Proposals, 2011–2015

  1. 1. Institute for Research in Training & Development<br />Potential Pennsylvania Economic Impacts of Natural Gas Tax/Fee Proposals, 2011–2015<br />Rose M. Baker<br />David L. Passmore<br />May 18, 2011<br />
  2. 2. Two–page summary and slides from this presentation<br />http://Tax-fee-impacts.notlong.com<br />
  3. 3. Some Preliminaries<br />
  4. 4. Five Ways to Consider a Tax or Fee<br />| Morality | Effectiveness | Efficiency | Equity | Impact |<br />
  5. 5. Ways to Consider a Tax<br />Morality<br />
  6. 6. Ways to Consider a Tax<br />Effectiveness<br />
  7. 7. Ways to Consider a Tax<br />Efficiency<br />
  8. 8. Ways to Consider a Tax<br />Equity<br />
  9. 9. Ways to Consider a Tax<br />Impact<br />
  10. 10. Way We Considered Taxes/Fees<br />Impact<br />
  11. 11. Four Tax/Fee Proposals<br />Summarized by Pennsylvania Budget & Policy Center<br />
  12. 12. Vitali (HB 33)<br />5% gross value + $0.046/MCF<br />Exemption for ≤60 MCF/day<br />
  13. 13. Yudichak (SB 905)<br />5% gross value <br />2% in years 1-3<br />2% when 90 to 150 MCF/day<br />Exemption for ≤90 MCF/day<br />
  14. 14. Harper (HB 1406)<br />5% gross value<br />1.5% years 1-5<br />Exemption for ≤ 90 MCF/day<br />
  15. 15. Scarnati fee(as of April 28)<br />$10,000/well/year.<br />Price & volume could increase to $25,000 or more in early years<br />Exemption for ≤60 (or 90) MCF/day<br />
  16. 16.
  17. 17. Economic & Population Impacts<br />No consideration of impacts of distribution of revenue generated.<br />| Employment | Gross State Product | Income | Population |<br />
  18. 18. Tax/Fee Treated as Production Cost<br />Gas producers are price-takers.<br />Henry Hub sets national prices.<br />Producers absorb cost of tax/fee.<br />Added costs reduce margins between prices and costs.<br />Reduced margins affect Pennsylvania competitiveness.<br />Production is slowed or eliminated as production moves elsewhere.<br />
  19. 19. REMI PI+ Model Linkages<br />
  20. 20. Estimation of Impacts<br />REMI PI+ Model Simulation<br />
  21. 21.
  22. 22.
  23. 23.
  24. 24.
  25. 25. How large are impacts?<br />
  26. 26. In PA, 7.1 million in 20117.6 Million in 2015<br />Range in Four Proposals From<br />-120 Jobs in 2011 (Harper)<br />-3,239 Jobs in 2015 (Vitali)<br />Employment<br />
  27. 27. In PA, $519 Billion in 2011$598 Billion in 2015<br />Range in Four Proposals From<br />-$10 million in 2011 (Harper)<br />-$272 million in 2015 (Vitali)<br />Gross State Product<br />
  28. 28. In PA, $446 Billion in 2011$490 Billion in 2015<br />Range in Four Proposals From<br />-$10 million in 2011 (Harper)<br />-$200 million in 2015 (Vitali)<br />Real Disposable Income<br />
  29. 29. IN PA, 12.8 Million in 201113.1 million in 2015<br />Range in Four Proposals From<br />-35 people in 2011 (Harper)<br />-1,647 people in 2015 (Vitali)<br />Population<br />
  30. 30. Institute for Research in Training & Development<br />Potential Pennsylvania Economic Impacts of Natural Gas Tax/Fee Proposals, 2011–2015<br />Rose M. Baker<br />David L. Passmore<br />May 18, 2011<br />

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