New Penn State Publication on State Tax Implications of Marcellus Shale Activity
Posted: February 27, 2011
Recent state tax collection information gathered by the Pennsylvania Department of Revenue provides some insight into the short run economic and state tax implications of gas development in the Commonwealth. The data show distinct differences between counties with Marcellus Shale gas drilling and those without. For example, state sales tax collections from counties with significant Marcellus drilling activity on average increased by a little more than 11 percent between 2007 and 2010, while collection in counties with no Marcellus activity on average decreased by more than 6 percent. Sales tax collections are an indication of the level of retail sales activity occurring within a county, so the data indicates that local spending has increased in counties with major Marcellus activity. State tax collections of the personal income tax and realty transfer tax show similar differences between Marcellus and non-Marcellus counties.
The Department of Revenue data does not include any cost impacts of Marcellus development on public services or the environment, which is the other essential-to-know counterpart to revenues. The results also do not indicate the impact on local government and school district tax collections since local jurisdications cannot levy a sales tax, and royalty and leasing income is exempt from the local earned income tax.
This analysis is from a new Penn State Cooperative Extension Fact Sheet, ‘State Tax Implications of Marcellus Shale: What the Pennsylvania Data Say in 2010,” which provides more detail about the data and implications. The fact sheet is available on-line for free, at http://pubs.cas.psu.edu/FreePubs/pdfs/ua468.pdf