Increase In Energy Taxes Hurt Business Groups

Businesses exist for profits. There is no denying that fact. No entrepreneur in his right mind will start a business only to expect to lose money in return. Businesses provide an income revenue for entrepreneurs as long as they know how to manage their business right and invest in the right industry. There are a lot of things at work when running a business. The work does not end in the conceptualizing of the business plan among other things – it is actually just the beginning.

The actual running of the business is where all the work is done by putting into practice all the theories and principles entrepreneurs believe in and in using them all to sell a product or a service and make money in return. Operational costs must also be considered as you need to spend money in order to make money. It’s an age-old practice followed by almost everyone in the business circle. Now, news about a rise in energy tax has a big impact on businesses as they usually use a lot of energy in their day-to-day business operation.

Business groups warned Tuesday that a state Senate-passed proposal to increase energy taxes will hurt the industry’s competitive standing, trigger higher bills for consumers and frighten away investment.

The groups said the proposal will be borne disproportionately by manufacturers that purchase large amounts of energy and argued that tax increases by way of consumers’ utility bills lack transparency.

Gene Barr, president of the Pennsylvania Chamber of Business and Industry, urged lawmakers to avoid “business-to-business” taxes and said they should try to “spread the burden more evenly.”

He sidestepped a question about what alternative approach he would endorse.

“We would just simply encourage them to look at being very cautious about what you do,” he said, adding that any additional revenues should be accompanied by measures to address civil litigation rules, wider tax issues and labor rights.


When business owners do the math, they realize how much money they need to spend more in order to do the same things they are doing now. However, the state is trying to look for ways to generate more money to fund various federal government services that benefit the public because the existing budget is not enough to cover all the essentials. Unfortunately, businesses have to take the fall this time and pay for higher energy taxes that the state desperately needs in order to fulfill its duties to the public.

A proposal that narrowly passed the Senate last month calls for an estimated $520 million in new net recurring revenue for the state general fund, with more than three-quarters of it coming from new or higher energy taxes: a new 5.7 percent tax on natural gas consumption; an increase in electricity taxes from 5.9 percent to 6.5 percent; and a new severance tax on natural gas extracted from the Marcellus and Utica shales.

The business groups said residential and commercial energy consumers of all sizes would be affected by the proposals, but large, industrial energy users will be particularly harmed.

The Pennsylvania Chamber of Business and Industry informally surveyed its members about the effects of the taxes. In the worst case, chamber president Gene Barr said, a large manufacturer said it could pay as much as $4 million more annually for gas and electricity with the new proposal.


It will trigger a domino-effect where business owners will pass this additional financial burden to the consumers by raising the cost of products or services they sell or provide. Business owners aren’t confident as well that they can count on these environmental regulatory reforms to make it out alive against the legal counter-attacks of environmental organizations. It is not also fair for consumers that use less energy but will have to pay for more because of the tax increase. With the budget deficit the Senate is now facing, there is a higher chance that this energy tax on oil and natural gas extraction will be implemented.

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