Shell Proposes to Pay Some Taxes Despite Pennsylvania Tax Exempt Status

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According to the Philadelphia Inquirer, Pennsylvania natural gas output has soared to 895 billion cubic feet from January to June of 2012, and that number is expected to increase nearly 80 percent by the end of 2015. Many other businesses and factories can utilize products and resources created from the fracking process, which led to Pennsylvania lawmakers passing a tax credit for petrochemical plants earlier this year, according to the Pittsburgh Tribune Review. However, local governments and schools would not be able to collect revenue from any facility built in an area ruled tax exempt. Royal Dutch Shell has proposed to pay $7.6 million to those local entities if the oil giant moves forward on a massive facility in Beaver County, according to the Pittsburgh Post-Gazette.

How much money would Shell save if it builds a facility in Pennsylvania?

According to the Tribune Review, the tax credits and tax exempt status would be available to Shell in 2017. That special status would save Shell close to $1 billion over the life of the program, which lawmakers argued were necessary to draw the facility to Pennsylvania over competing states, according to the Post-Gazette.

Why would Shell pledge to pay taxes it is exempt from?

Shell recognizes that the jobs created by the facility could put a strain on the county and the school district it is located in as families and workers move toward the area because of the tax exempt status. According to the Times Online, the Central Valley School District would lose close to $300,000 per year and the local township would lose $40,000 per year, but Shell's proposal to pay that missing revenue would cancel out any potential losses.

How many jobs could the facility generate in the area?

A manufacturing facility on the scale that Shell is planning to build would create as many as 8,000 jobs, plus the facility would provide $4.8 billion of economic output every year. However, only 400 or so of the full-time jobs would be located at the factory with the rest being made up from other businesses providing support and raw materials to the Shell facility.

Is the facility a done deal?

A Dec. 31 deadline exists on whether or not Shell will purchase the land from an existing business, but no formal written agreement yet exists as to the development of the facility, according to the Times Online. However, the economic and job-related improvements for the Western Pennsylvania area are expected to be great if the company decides to build the sprawling complex.

Jason Gallagher is a long-time Pennsylvania resident. He has experiences in trends and developments in many regions from having lived in many parts of the Keystone State, and currently resides in the Pittsburgh Area.

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