This document analyzes the potential economic impacts of four proposed natural gas tax/fee proposals in Pennsylvania from 2011-2015 using the REMI PI+ economic model. It finds that the proposals could result in losses of 120-3,239 jobs in 2015, reduce state gross domestic product by $10 million to $272 million, lower real disposable income by $10 million to $200 million, and cause the population to decrease by 35-1,647 people compared to projections without the taxes/fees. The models treats the taxes/fees as a new production cost for gas producers, which could slow production and cause some to move elsewhere, reducing Pennsylvania's competitiveness.

1. Institute for Research in Training & Development Potential Pennsylvania Economic Impacts of Natural Gas Tax/Fee Proposals, 2011–2015 Rose M. Baker David L. Passmore May 18, 2011

2. Two–page summary and slides from this presentation http://Tax-fee-impacts.notlong.com

3. Some Preliminaries

4. Five Ways to Consider a Tax or Fee | Morality | Effectiveness | Efficiency | Equity | Impact |

5. Ways to Consider a Tax Morality

6. Ways to Consider a Tax Effectiveness

7. Ways to Consider a Tax Efficiency

8. Ways to Consider a Tax Equity

9. Ways to Consider a Tax Impact

10. Way We Considered Taxes/Fees Impact

11. Four Tax/Fee Proposals Summarized by Pennsylvania Budget & Policy Center

12. Vitali (HB 33) 5% gross value + $0.046/MCF Exemption for ≤60 MCF/day

13. Yudichak (SB 905) 5% gross value 2% in years 1-3 2% when 90 to 150 MCF/day Exemption for ≤90 MCF/day

14. Harper (HB 1406) 5% gross value 1.5% years 1-5 Exemption for ≤ 90 MCF/day

15. Scarnati fee(as of April 28) $10,000/well/year. Price & volume could increase to $25,000 or more in early years Exemption for ≤60 (or 90) MCF/day

17. Economic & Population Impacts No consideration of impacts of distribution of revenue generated. | Employment | Gross State Product | Income | Population |

18. Tax/Fee Treated as Production Cost Gas producers are price-takers. Henry Hub sets national prices. Producers absorb cost of tax/fee. Added costs reduce margins between prices and costs. Reduced margins affect Pennsylvania competitiveness. Production is slowed or eliminated as production moves elsewhere.

19. REMI PI+ Model Linkages

20. Estimation of Impacts REMI PI+ Model Simulation

25. How large are impacts?

26. In PA, 7.1 million in 20117.6 Million in 2015 Range in Four Proposals From -120 Jobs in 2011 (Harper) -3,239 Jobs in 2015 (Vitali) Employment

27. In PA, $519 Billion in 2011$598 Billion in 2015 Range in Four Proposals From -$10 million in 2011 (Harper) -$272 million in 2015 (Vitali) Gross State Product

28. In PA, $446 Billion in 2011$490 Billion in 2015 Range in Four Proposals From -$10 million in 2011 (Harper) -$200 million in 2015 (Vitali) Real Disposable Income

29. IN PA, 12.8 Million in 201113.1 million in 2015 Range in Four Proposals From -35 people in 2011 (Harper) -1,647 people in 2015 (Vitali) Population

30. Institute for Research in Training & Development Potential Pennsylvania Economic Impacts of Natural Gas Tax/Fee Proposals, 2011–2015 Rose M. Baker David L. Passmore May 18, 2011