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By Anjeanette Damon (contact) 
Thursday, April 7, 2011 | 3:01 p.m.
Sun Archives
The mining industry spent more than an hour today working to defend itself against an effort by lawmakers to significantly reduce the substantial deductions it enjoys on its net proceeds on minerals tax.
The reaction split mostly down party lines, with Democrats skeptical of the special deductions the mining industry is entitled to that don’t apply to other businesses and Republicans defending the industry as important to rural Nevada’s economy.
Assemblywoman Peggy Pierce, D-Las Vegas, the lone lawmaker to put forward a series of tax bills that she says are an alternative to Gov. Brian Sandoval’s “nuclear option” budget cuts, sponsored Assembly Bill 428, which would reduce the mining industry’s tax deductions by 60 percent.
Legislative staff estimated the change would net the state $81 million as lawmakers work to fill a $2.5 billion shortfall.
“It may not seem like a lot but $81 million would help our communities,” said Jan Gilbert, of the Progressive Leadership Alliance, which has long sought to extract more tax revenue from the mining industry.
Mining industry lobbyists argued Pierce’s proposal would “artificially inflate” the value of their minerals and sought to convince lawmakers an industry-specific increase is poor policy that would exacerbate Nevada’s over-reliance on a narrow tax base.
Tim Crowley, president of the Nevada Mining Association, repeated his assertion that the industry would support a “broad-based” tax if the Legislature and Sandoval agreed to one—a somewhat hollow promise given that Sandoval has repeatedly vowed to veto any tax increase.
Democrats on the Assembly Taxation Committee repeatedly questioned why the industry is allowed a series of deductions that other businesses don’t enjoy.
The mining industry pays a 5 percent property tax, but is allowed to deduct the cost of extracting and processing the mineral.
An accountant for Barrick testified the vast majority of that cost is “refining and freight.” Skeptical lawmakers ran down the list of approved deductions, which include the cost of fire insurance, equipment maintenance and marketing (the cost of bringing the mineral to market, not the cost of enticing customers to buy it).
“We’re really begging the question here is how liberal some of these deductions and write-offs are,” Assemblywoman Theresa Benitez-Thompson said. “It’s hard to make the argument a lot of what you folks do to get the mineral out of the ground and to market is unique to your industry.”
Crowley countered that the net proceeds on minerals tax is a property tax. The deductions, he said, allow the government to determine the proper value of that property and are narrowly defined to include only the “essential” costs of extracting and processing the mineral.
“Anything that doesn’t pass that litmus test, it’s not deductible,” he said.
Lawmakers still questioned how some of the deductions were essential to extracting the mineral, and not a normal cost of doing business.
“I get that you guys have to buy fire insurance but I have to buy fire insurance to protect my business, too,” Assemblywoman Marilyn Kirkpatrick, D-Las Vegas said.
this is why i say...
REPUBLICANS ARE MAGGOTS!!!
this is why i say...
BRIAN SANDOVAL IS A COMPLETE AND TOTAL FRAUD!!!
it's really very simple boys and girls...
brian sandoval...
and republicans...
value campaign contributions from mining more than the education of the innocent children of this state...
shame on them...
they are scumbags...
their political careers must end!!!
And Nevada's rural industry has done what for southern Nevada as of late? Or are we supposed to pick up the slack for everyone up north with nothing in return?
Listen, no one's going to fire those workers; they need human beings to go into the ground and get the rocks. The mining industries won't pack up shop and move elsewhere; the rocks are here. And if they opt to leave, someone else will gladly come along and gladly pay more in taxes because they're still going to walk away with a fortune. Any argument from the mining industry to the contrary is smoke and mirrors.
No more special treatment for the mining industry.
Teaser,
Exactly right. Gaming is now pretty much everywhere. Wal-Marts are all over the country. But mining goes (and stays) where the minerals are (at least until they extract every last bit and then they pack up and leave overnight). The Gov and Republicans don't fear the economic impact higher taxes on mining will have on rural Nevada, they just fear the economic effect it will have on their own pockets, which continue to be lined with mining lobbyists' $. Pathetic.
If anybody wants to know why unemployment is so high, just look at the tax and spend democrats and there is your answer.
sdchillin, you are a world class moron.
Mining has received treatment so favorable as to be a crime against the citizens of this state. That industry pays virtually nothing in taxes to the state that hosts it, that services it and that regulates it, but delivers massive profits to foreign shareholders.
If you actually care about Nevada, you should recognize the fact that corporate welfare favoring the mining industry is harmful to every citizen in this state, including you.
One business makes 5.8 BILLION and pays 416 MILLION in taxes. Another business makes 5.8 BILLION and pays 48.6 MILLION in taxes. Which one is fair? Which one is receiving special treatment? 48.6 MILLION in taxes is mining in 2009. 416 MILLION in taxes is gaming in 2010. What has happened to the price of gold since 2009? What is likely to happen to the casino industy when gas hits $4 a gallon and stays there? Hint, think what happened a few years ago. REPEAL THE MINING DEDUCTIONS AND THE CONSTITUTIONAL PROTECTION FOR MINING.
@sdchillin. Can you explain to me how this is a "tax and spend" state? The only tax Walmart, Target, the banks pay is a 1.17% payroll tax, and unemployment insurance. There is NO tax on corporate profits. Mining pays 10% of what gaming pays.
Good job, Anjeanette. Good and fair reporting.