Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

This Tax Credit Will Create Jobs Why Pennsylvania Should Enact a New Incentive to Attract Natural Gas Facilities

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

This Tax Credit Will Create Jobs Why Pennsylvania Should Enact a New Incentive to Attract Natural Gas Facilities

Article excerpt

With thousands of jobs at stake, Pennsylvania has out-negotiated competing states for a chance to land the Shell Chemical ethane "cracker" plant, and this is no time to give back our winnings because of a misunderstanding over tax credits.

Both Ohio and West Virginia offered incentives to Shell. The Gulf Coast, already equipped with the infrastructure and surrounding customer base, was a tempting location from the very start. Gov. Tom Corbett won this deal by understanding Pennsylvania's strengths and by thinking not in cycles of two, four or six years, but with an eye on the decades ahead.

He knew Pennsylvania had three things going for it:

* A rich supply of the "wet" ethane gas needed to process ethylene, a building block of products ranging from sneakers and sealants to pipes and tires.

* A designation of the site as a Keystone Opportunity Zone, a unique and longstanding Pennsylvania incentive that spares new and expanding companies certain taxes in return for locating here and hiring here.

* The newly proposed Pennsylvania Resource Manufacturing Tax Credit -- a forward-thinking proposal that would give a portable five-cent-per-gallon tax credit on ethane purchased in Pennsylvania to be processed in Pennsylvania. While critics are calling it a "Shell tax credit," it would apply to anyone who constructs a cracker plant; some working families are calling it a "jobs credit."

Capped at $66 million annually and taking effect in 2017, the PRM tax credit would be performance-based. This means it would be awarded only when a cracker plant buys natural gas containing ethane. A cracker would only buy such natural gas if it has suppliers from which to purchase gas and manufacturers to which it can sell the ethane derivatives. Since the PRM tax credit could be sold to upstream suppliers and downstream manufacturers, the incentive to develop this new industry in Pennsylvania would come full-circle.

In short, this credit would give a new industry an incentive to do business and create business activity upstream, in Pennsylvania's Marcellus drilling fields, and downstream, at the new manufacturing plants that will grow around the plant to use the ample and inexpensive supply of ethylene. …

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