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Policy groups seek common gas severance tax for WV, PA and Ohio

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Public policy groups in West Virginia, Pennsylvania and Ohio are asking the governors of the three states to adopt West Virginia's severance tax on gas and oil.

"Given our states' shared experience with natural gas and oil extraction, a common rate and structure of taxation would be a smart approach. Working together, we can make sure our region benefits from new development even as we protect our communities from new costs and environmental risks," said the letter dated March 10.

The letter was signed by Ted Boettner, executive director of the West Virginia Center on Budget and Policy, Sharon Ward, director of the Pennsylvania Budget and Policy Center, and Amy Hanauer, executive director of Policy Matters Ohio.

"Having a single tax rate across the three states would provide important long-term predictability for the industry and help provide a more promising future for Ohio, Pennsylvania, and West Virginia. Setting a common tax no lower than the West Virginia rate, as we recommend, would bring the entire region more in line with gas-producing states in the West and in the South," the letter says.

A single rate structure without holidays, exclusions and credits and with a similar tax base across all products yielded from a well would take taxes out of the competitive equation, eliminate distortions that widely varying rates might cause and help provide sustained funding for state priorities with little overall impact on the industry, the letter said.

"Interstate competition can only lead to a race to the bottom in employment, infrastructure and environmental protection. Interstate cooperation can sure that industry growth is managed in a way that maximizes benefits and minimizes costs to residents," the letter said.