Saturday, May 30, 2015

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

Since the proposed Shell plant is in a tax-free zone, the multinational might sell its tax credits to other PA companies, writes Peter DeCoursey

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.  

About this blog

PhillyDeals posts drafts, transcripts and updates of Joseph N. DiStefano's columns and stories about Philly-area business, which he's been writing since 1989.

DiStefano studied economics, history and a little engineering at Penn and taught writing at St. Joseph's. He has written thousands of columns and articles for the Inquirer, Bloomberg and other media, wrote the book Comcasted, and raised six children with his wife, who is a saint.

Reach Joseph N. at,, 215.854.5194 or 302.652.2004.

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Joseph N. DiStefano