The Nevada State Senate Monday voted 17-4 in favor of a proposed constitutional amendment which will erode nearly 150 years of special tax protections for mining in the one of the world?s foremost gold mining regions. Only four Republican senators, including three whose districts include rural counties, voted against the measure.
Nevada presently levies a mineral extraction tax of between 2%-5% of net proceeds for each geographically separate operation. However, a number of deductions may also be taken by mining companies.
Sen. Barbara Cegavske, R-Las Vegas, noted the tax breaks being given to Apple to locate in Reno will give that company a tax rate of less than 1%, while mining pays its workers an average of $87,000 a year. However, her Clark County colleague, Senate Minority Leader Michael Roberson is a strong advocate of a tax increase on mining.
Even Nevada Gov. Brian Sandoval will be powerless to stop SJR 15 if it is approved in the Assembly because the governor cannot veto a resolution calling for a public vote on an issue.
Despite a two-year advertising blitz by the Nevada Mining Association, combined with mining companies? formerly successful strategies of generous campaign donations, as well as lobbying by the state?s most powerful lobbyists, a 2011 revelation that several Nevada mines had not been audited for years by the Nevada State Department of Taxation did not help mining politically.
In the meantime, local governments, as well as Nevada?s education system, which have been hurting for revenue for several years, are strongly pushing state lawmakers to extract more revenue from mining companies, who, up until the last year, had been proclaiming record profits and production.
During past legislative sessions, both educators and local officials were warned by fiscal experts not to rely on the volatility of the state?s mining sector to fund mandated services.
More recently, both major mining companies and junior exploration companies operating in Nevada have been experiencing either substantial project write-downs or a lack of available financing for their projects.
Previously, as politicians and governments of third-world countries developed a powerful appetite for mining-generated revenue, Nevada mining?s relatively stable taxation regime has given the state an excellent rating as a place to do business.
Ironically, Nevada lawmakers are in the process of dismantling what has been considered a model mining taxation system touted by the World Bank and the IMF to developing nations. Therefore, if the taxation cap is lifted in Nevada, some mining advocates fear it could have repercussions beyond the state?s borders.
If SJR15 wins approval in the Assembly, Nevada voters will be asked to vote in 2014 on whether to remove mining taxation limits from the state constitution. However, proponents of increased mining taxation fear powerful mining companies, such as Newmont and Barrick, will go to court to stop the issue from going on the 2014 ballot.
Source:?Mineweb.com
