Nevada lawmakers look to remove mining tax protections

Nevada Senate Republicans introduced legislation that would both remove the mining industry’s constitutional tax protections and find a way to increase taxes on the industry as an alternative to the margins tax ballot initiative.

The Republican Senate Leadership is trying to head off a margins tax on all Nevada businesses earning in excess of $1 million, offering instead an alternative tax measure aimed at Nevada’s precious metals sector.

“The competing measure will ask whether mining should contribute to the state’s education system at a level that more adequately reflects the benefit the industry gains by operating in our state,” said Senate Assistant Minority Leader Ben Kieckhefer, R-Reno.

Calling the margins tax “flawed,” Senate Republicans said in a press release that Democrats should help Republicans pass Senate Joint Resolution 15, an existing measure to remove the mining industry’s tax from the constitution that has already passed the Legislature once. If the Legislature passes it a second time this year, it would go on the 2014 ballot, The Las Vegas Sun reported.

“We believe the current discussion relating to broadening the tax base and finding more money for education is important,” said Senate Minority Leader Michael Roberson, R-Henderson. “To that end, we will continue to work with our colleagues on both sides of the aisle to identify sensible structural reforms to Nevada’s revenue system.”

Roberson called the margin tax, which will also be on the 2014 ballot, a “fatally flawed, job-killing tax on businesses large and small that will stall economic development, put employers out of business, and lead to even higher numbers of unemployed Nevadans.”

In advocating for a mining tax as a legislatively approved alternative to the margins tax, the Republicans in the Senate are essentially asking voters to choose at the ballot in 2014 whether they prefer a tax on a specific industry or a tax on net business revenues.

The lawmakers noted that in 2011, Nevada’s gold mining industry produced approximately $8.8 billion in gross revenue but only paid $97 million in net proceeds taxes to the state general fund, along with $106 million paid to local government in gross proceeds. "This totals approximately 2.3 percent of gross revenues."

Meanwhile, Nevada gaming produced $10.8 billion in gross revenues and paid $694 million, or 6.6 percent of gross revenues in FY2012, the legislators observed.

“Billions of dollars of nonrenewable natural resources are extracted from our state and shipped out-of-state every year,” Roberson said. “These resources cannot be replenished. At some point the gold will be gone. And, when the gold is gone, mining will be gone. It is imperative that we ensure that Nevadans get the best deal we can, while we can.”

Bringing mining’s rate up to 6.75 percent would yield $780 million for Nevada’s education system during the 2015-2016 and 2016-2017 school years, Republicans said.

Alternatively, raising the industry’s current net proceeds tax on gold mining to 10 percent would yield Nevada $630 million, according to the press release.

If the net proceeds tax on gold mining dedicated to the state was set at 10 percent, Nevadans would expect an additional $630 million over the biennium to fund education.

Alternatively, if gold mining was taxed on gross receipts at the same 6.75 percent rate that gaming pays, Nevadans could expect an additional $780 million per biennium to fund education.

At present, however, the constitution prohibits lawmakers from raising the net proceeds on minerals rate above 5 percent.