Law can be amended
The Pennsylvania Supreme Court last week ruled that Fayette County’s recent practice of figuring in the value of gas and oil reserves when taxing property is unlawful. This was an unexpected ruling as many Pennsylvania counties have taxed gas and oil companies for many years. Fayette belatedly joined the others when a handful of residents pressured the commissioners to levy the tax as a way to boost the county’s coffers without continually sticking it to homeowners.
The Independent Oil and Gas Association of Pennsylvania, along with owners of oil and gas companies, didn’t see it that way and filed a legal challenge.
The county’s Common Pleas Court found Fayette was within its rights to tax the natural resources, a ruling that was then upheld by Commonwealth Court. It seemed a sure thing that the Supreme Court would affirm those decisions.
So it came as a shock when the court ruled that just because everyone else had been doing it for years doesn’t make it right.
The Supreme Court’s reasoning is sound. Both laws governing the taxation of real estate (the General County Assessment Law of 1933 and the Fourth to Eight Class County Assessment Act of 1943) mention specific items that can be taxed – including coal – but fail to mention gas or oil.
Further, unlike coal, which is part of the land, gas and oil flow through a property and it is difficult to value.
The court’s ruling will affect every county, not just Fayette. It will be up to the governor and General Assembly to provide a remedy.
Lawmakers can amend the law to include a usage tax by assessing a fee on the gas and oil that is removed from the ground.