New York is now officially the last shale gas fracking tax haven in the USA.
It’s like fracking in an offshore tax-haven – like the Caymans ! Gives a new meaning to “fracking offshore” – without having to leave the state. Upstate: Governor Cuomo’s largest Tax Free Zone !
Phillip Simpson passed this along – seems like the state of Illinois tacked a state severance tax onto its new fracking regulations, which leaves New York as the last fracking tax haven in America. (Pennsylvania has a “well impact fee” that is a state tax on productive wells)
Why is this significant ?
A. If the frackers can buy their way out of a state tax, they can buy their way out of anything
B. New York state derives no direct benefit from fracking – no money for roads, for clean ups, nada.
The Illinois Severance Tax On Oil & Gas Production:
“Prior to the Hydraulic Fracturing Tax Act, Illinois was one of the few drilling states not to impose any severance or gross production taxes on the extraction of its minerals. For oil and gas removed on or after July 1, 2013, Illinois imposes a tax upon the severance and production of oil or gas from a well on a production unit, provided that well is subject to the Hydraulic Fracturing Regulatory Act.”
“For the first 24 months from the date the HFRA well first produces oil or gas, the rate of the HF tax is 3 percent of the value of the oil or gas severed. After that period, the tax rate depends on production. For gas, the HF tax rate is 6 percent of the value of the gas severed after the 24th month of production. ”
Which leaves New York as the last shale state with no state revenue from shale gas production. Why ? Because that’s what the gas lobby paid for. It is cheaper to pay off a politician than pay a gas production tax. Even a Texas Aggie can do that mental math.
With or without a pina colada by a palm tree in the sand.