PA wants to give oil giant a $1.7B tax break: Update


NEW: Here's what Gov. Corbett's staff says he's really up to with the 5 cents a gallon ethane tax break.

UPDATE: GOP Senate aide Drew Crompton confirms to Associated Press that Gov. Corbett's Shell tax break is being discussed in negotiations with GOP Senate leaders.
AP story here.


EARLIER: Peter L. DeCoursey of subscription statehouse news service Capitolwire this morning posted a report -- quoting unnamed Harrisburg sources -- alleging PA Gov. Tom Corbett has agreed to give the Shell petrochemical interests who plan to build a big ethane plant -- in what's already a tax-free Keystone Opportunity Zone near Pittsburgh -- tax credits totalling $67 million a year, or $1.7 billion in total, over 25 years, starting in 2017.

Corbett's staff had no immediate comment when I called this a.m.

The ethane plant, which would process lucrative byproduct of PA's Marcellus and Utica shale-gas fields for industrial chemicals, could create up to 20,000 jobs, according to the Corbett administration.

That's a big prize - but PA had to sell itself over tough competition from Ohio and West Virginia. The plant is still not built. The tax break is intended, the Capitolwire report says, as a sweetener to make sure it will be built in PA.

According to DeCoursey: "Typically, the governor is being secretive about it. He is trying to give away that much taxpayer money without telling anyone until the little-read and arcane tax code bill is enacted later this month."

But why would Shell need a tax break - in a tax-free zone? DeCoursey suggests the Shell deal will "mimic the favorite provision of many companies who use the Pennsylvania Film Tax Credit" - allowing the beneficiary to sell the tax breaks, at a discount, to other Pennsylvania companies so they don't have to pay state taxes, either. 

That film credit used to be unpopular among PA Republicans, but as I reported here Philadelphia lawyer Jeffrey Rotwitt brought the Republicans around, convincing tourism-dependent reps to back both the film credits and Rotwitt's state-subsidized movie studio in Delaware County.

"Here’s another weird part," adds DeCoursey: "No one has told the legislative leaders, at least as of late-night Sunday, June 3rd, whether this is something Shell asked for, something Shell demanded or something to which Corbett has already agreed." So maybe, DeCoursey suggests, the Shell break is a bargaining chip for other Corbett goals.