PA Republicans oppose taxing gas

Effort to undo supreme court ruling

By TOM KANE

HARRISBURG, PA — Gas companies don’t want to pay taxes on gas in Pennsylvania.

Therefore, they oppose a proposed Pennsylvania house bill that would explicitly make underground resources such as natural gas and oil subject to real estate assessment and taxation. The bill would require gas companies to pay taxes on the resources they extract, but wouldn’t add any tax burden to landowners.

Up until December 2002, the gas companies had to pay taxes because the courts had traditionally ruled that such interests were to be considered “interests in real estate” and subject to assessment and taxation, even though the assessment laws did not explicitly enumerate them as taxable.

After an appeal of a case in Pennsylvania Supreme Court brought by the Independent Oil and Gas Association (IOGA) versus the Board of Assessment Appeals of Fayette County, the court ruled that the Pennsylvania tax law did not authorize the imposition of real estate tax on oil and gas, finding that such products [gas and oil] are not “lands” in the context of tax law and should not be taxed.

The court ruled that, unlike coal that is firmly entrenched, gas and oil are by nature evanescent and can migrate.

Thus follows the reason for proposing law HB 1373, which would amend the state General Assessment Law to explicitly make underground resources, such as gas and oil, subject to real estate assessment and taxation.

“We’re concerned that these companies are coming in and sucking up huge profits at the expense of citizens of Pennsylvania,” said state Rep. Eddie Pashinski, D-Wilkes-Barre, a co-sponsor.

The bill was introduced by House Majority Leader Bill De Weese in May 2007 for municipalities of Western Pennsylvania, who had been relying on revenue for years before it was shut off by the court ruling.

“However, the bill has been stalled in the House Finance Committee and the sentiment among supporters is that the state senate Republicans, on principle, won’t support a tax bill,” De Weese said at the end of August. “I don’t think it has the support to pass in the house, pass in the senate and be signed by the governor.”

In New York State Property Law, gas is considered like “lands” in the broad sense and therefore is subject to assessment and taxation.