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Tax data shows Marcellus effect

By - Last modified: May 10, 2012 at 9:35 AM

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The increase in overall economic activity generated by the Marcellus Shale natural gas industry is showing up in tax data, according to Penn State researchers.

Pennsylvania counties with substantial drilling activity have higher sales tax collections, realty transfer tax collections and taxable income growth than counties that don't, according to "Marcellus Shale and Local Collection of State Taxes: What the 2011 Pennsylvania Tax Data Say," a white paper released Tuesday.

In counties with 150 Marcellus Shale wells or more, sales tax revenue rose by nearly 24 percent from 2007 to 2011, compared with a fall of 5 percent in counties with no wells, researchers found.

"The data support anecdotes we hear about Marcellus development increasing local retail activity," co-author Tim Kelsey, a professor of agricultural economics, said in a statement.

Likewise, realty transfer taxes in the former counties rose by 4.3 percent on average, compared with a drop of 33.4 percent in the latter. Total taxable income in counties with 90 or more Marcellus wells rose by 6.3 percent from 2007 to 2009, compared with a decline of 5.5 percent for other counties. For taxable income, 2009 is the last year with full data available, researchers said.

Income due to royalties in Marcellus counties increased by 441 percent over those years, Kelsey found, reflecting gas lease and royalty payments.

The data show natural gas production is making an "overwhelmingly positive impact" on local economies, said Kathryn Klaber, president of the Marcellus Shale Coalition industry group.

Because the increases are occurring in rural, sparsely populated counties, the overall impact on state tax collections is comparatively small, Kelsey noted. The total increase in state income tax collection in Marcellus counties in 2009 was $533,000, compared with total collections of $9.1 billion, he said. That is a boost of 0.006 percent.

The report does not touch on local tax collection, industry-specific taxes and fees or industry impacts, Kelsey said.

Write to the Editorial Department at editorial@cpbj.com

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