Impact Fee vs. Severance Tax

Energy & Resources|Tax

By Theodore Pettko

Natural gas producers for unconventional wells do pay something; it’s in the form of an impact fee.  Impact fees arose from PA Act 13 of 2012.  In 2016, $173.2 million was paid in impact fees, and in 2015, the amount was $158.7 million.    Total impact fees have been over 1.2 billion since the Act went into effect.  Regardless of whether it is called an impact fee or severance tax, payments are made.  However, the real question is: What happens to the money?

The money collected is distributed among the municipalities, counties and environmental and infrastructure programs throughout the Commonwealth.  The majority of the money collected goes to county and municipal governments in which shale-gas activity is occurring, rather than going to the general funds and use of the Commonwealth.

This is the disconnect.  Political officials want to use these funds for general purposes, so that there is more distribution of the funds to a greater audience – as opposed to the funds going to where the shale-gas activity occurs.  Those areas without shale-gas activity aren’t receiving a lot of benefits from the shale-gas assets of the Commonwealth. To learn more about impact fees, contact us. 

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

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