Replies to This Discussion

Permalink Reply by wyalusing jim on May 17, 2014 at 3:02pm

there is one good thing about it, you wont have to pay income tax on the percentage that is taken for the severance tax.

and the proposals by the democratic candidates for governor are in the 10% range.

wj

Permalink Reply by Ann Ticopa on May 17, 2014 at 8:04pm

The last version of HB 1684 I saw would prohibit deduction of a severance tax share from rights owner royalty payments, in addition to  prohibiting payments under 1/8. (Nothing on the - also common - clause that allows the lease holder to pay certain emcumburances on a leased property and deduct the amount from the royalty paymnet,)  Of course, HB 1684 may or may not pass, or survive any legal challenges if it does.  It's not unheard of for legislators to break pary ranks and support legislation they wouldn't ordinarily if they don't expect it to pass - particularly in an election year.

My experience was that a ERI landman virtually waved a big red flag when he touted the proportional share clause's alleged benefit to me, so I was aware of the downside.  (If he had bothered to check Landex, he'd have known my property wasn't enrolled in Clean and Green.)    That clause wasn't the deal-breaker, so I don't know if they would have been willing to strike it.

As for a severance tax, it depends on what the revenue would be used for.  If it would go to temporarily plug holes in the state budget like the proposed DCNR leasing, no.   But if it was dedicated to something like a program to lower local school district real estate taxes, maybe.  

Incidentally, there is a SWEPI well permit for YOUST 405 22H (Jackson Twp) in the works. 

Permalink Reply by Gringo on May 17, 2014 at 11:19pm

HB 1684 is stalled out, last I heard it sounded like it would be watered down with no teeth. Remember last year,landowners got clarified royalty statements and the gas co"s got pooling and unitization. I don't care where the money it is another tax aimed at you and I only. Why not a extra tax on people with windmill royalties, or any single other source of income. 

Permalink Reply by Ann Ticopa on May 18, 2014 at 3:22am

Out of curiosity, I'd checked the Tioga County 2013-1 production numbers to see what percentage was from DCNR wells.  The agency had ~20% of the wells, which accounted for ~30% of the total production.  Unless the state was audacious enough to exempt itself, a severance tax would also apply to government-administered land ... not only "you and I".   The current DCNR PILT (payment in lieu of taxes) payment is $3.60/acre/year, 1/3 each to the county, school districts, and municipalities.  (HB 2112 would raise it to $5.40,)

Personally, I don't see any practical difference between imposing a "new tax" vs raising an existing tax or calling it a fee instead of a tax. 

Permalink Reply by Gringo on June 5, 2014 at 11:12am

Why exempt themselves, it makes no difference to the state 0% or 100% tax when they are the taxing authority. PILT program has nothing to do with this issue. 

The difference is the impact fee is not for landowners and a severance may well be. Raising taxes on the successful is a poor excuse for living within your means. Keep hammering the successful and everyone loses.