Clinton targeting mines for new taxes

Friday, Feb. 25, 2000 | 12:19 p.m.

Clinton is again proposing a "user fee" for hard-rock mining on public lands and repeal of the mineral depletion allowance the mining industry depends upon to reduce its taxes.

"Both of those provisions have raised their ugly heads again," said David Lemmon, press secretary for Sen. Richard Bryan, D-Nev.

"Obviously, the senator doesn't think either one of those provisions is necessary. We're prepared to do everything we can to oppose them," he told the Elko Daily Free Press.

Low gold prices already have forced worker layoffs and postponement of new projects in the industry in Nevada, Lemmon said.

Passage of either or both of the budget proposals "would be just one more blow," he said.

Sen. Harry Reid, D-Nev., said this week he is expecting to once again block the Clinton administration's proposal to eliminate depletion allowances, an accounting method hard-rock mining companies use to depreciate ore deposits.

"They put it in the budget every year, and we knock it out," the senator said.

It's the fourth year in a row the Clinton administration has made such a proposal, said Karen Batra of the National Mining Association.

"It's especially detrimental to the state of Nevada, where the majority of metals mining is done on public lands," Batra said.

Both Batra and Lemmon said that while the administration calls the fee a net smelter royalty, it is really a 5 percent gross royalty.

The user fee apparently comes out of an idea suggested by Vice President Al Gore during a campaign speech back in November, when he proposed the government spend $2 billion over 10 years to create parkland in urban areas and fund the project with a royalty on hard-rock mining.

Lemmon said Bryan isn't opposed to the parkland concept but rather the way the funding would be raised by the royalty on hard-rock mining on public lands.

Reid wrote to Gore in November opposing the user fee idea, stating then that the mining industry "should not be used as a scapegoat for our failure to adequately fund our conservation priorities."

The Nevada Mining Association says the depletion allowance "recognizes the unique nature of resource extraction by providing a realistic and practical method of measuring the decreasing value of a deposit as materials are extracted."