Mining tax initiative

Monday, Dec. 7, 2009 | 2:05 a.m.

Nevada’s mining industry enjoys an enviable position when it comes to taxes — the state constitution limits the types of taxes it pays and state law gives mining companies generous deductions.

As the Las Vegas Sun’s David McGrath Schwartz reported Friday, the Progressive Leadership Alliance of Nevada, a liberal advocacy group, is planning an initiative to remove the statutory deductions.

Bob Fulkerson, executive director of PLAN, noted that the state’s budget continues to founder because of decreasing tax revenue, particularly because of the slumps in gaming and tourism. Meanwhile, gold prices have skyrocketed.

“We have an enormous need in our budget,” Fulkerson said. “One industry is recording all-time profits, and that’s the mining industry. Yet it’s paying next to nothing to the general fund.”

The mining industry contends that it pays its fair share of taxes, although it seems clear that it doesn’t. As we noted during this year’s legislative session, the tax doesn’t correspond to the industry’s bottom line. For example, a 21 percent decline in the value of minerals mined would result in a 52 percent decrease in mining taxes. That simply doesn’t add up.

Mining’s exemptions demonstrate the disparity in the state’s tax system. Many businesses pay virtually no taxes while the state budget hangs precariously on the highly cyclical tourism industry. The Legislature knows this. It has done several studies, and it is doing one now. They all find the same thing: The system is broken.

Lawmakers and state officials have been reluctant to change mining taxes because of the industry’s considerable clout. Instead of fixing the problem, they do studies.

Don’t expect any leadership from the governor’s office on this issue. Gov. Jim Gibbons, who is considering calling a special session of the Legislature to deal with the budget, laughably claims the real problem is state spending.

We understand PLAN’s frustration and agree that something needs to be done. However, the initiative process is not the way to make tax policy. There are too many nuances that cannot be left to a simple yes-or-no vote. We are hopeful that next year’s election brings new leadership to Carson City that will have the political courage to change the system to make sure everyone pays their fair share.