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September 23, 2014

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Gaming, mining industries become early targets for taxes

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Sam Morris / Las Vegas Sun

Democratic Senators Sheila Leslie, Ruben Kihuen and Mo Denis confer during the first day of the 2011 legislative session Monday, February 7, 2011 in Carson City.

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CARSON CITY – The miners and the gamers appear to be two early targets in the search by the Nevada Senate for higher taxes.

Sen. Sheila Leslie, D-Reno, the chairwoman of the Senate Revenue Committee, complained that record high profits were being realized in gold production, and it’s not reflected in the tax collections in Nevada, she said. The revenue committee heard its first testimony from the public.

Meanwhile, the Senate Finance Committee got a closer look at four proposed options for higher casino taxes, up to $28 million, to support the state Gaming Control Board in its regulation of the industry.

Jan Gilbert, of the Progressive Leadership Alliance, said she hoped for tax increases to lessen the pain for education and social services, which are facing cuts in the governor's proposed budget.

"I hope you look at the mining tax," she told the revenue committee. “Huge amounts of money are leaving the state” and the money should stay in Nevada, she said.

Geoff Lawrence, policy analyst for the Nevada Policy Research Institute, told the committee the modified business tax that was increased during the last Legislature hurts workers because wages are lowered in response. He said many new taxes end up hitting consumers.

The Gaming Control Board now receives 60 percent of its funding from the state’s general fund and 40 percent from casino fees. Legislators are looking at the possibility of making casino owners pay more -- possibly 100 percent of the board's budget.

Mark Lipparelli, chairman of the Control Board, said Mississippi supports its regulatory agency entirely by taxes collected from casinos.

The board, at the direction of the 2009 Legislature, sent a questionnaire to gaming license holders outlining four options for higher taxes to collect an additional $28 million to support the regulatory system.

There were eight responses and half said “no tax is a good tax,” while the remainder suggested that big casino companies pay the added tab.

One option outlined would be an increase in the quarterly and annual fees on every slot machine by $145.

Another alternative would be a $500 flat fee per machine on casinos with more than 2,000 gaming devices. Those with fewer than 100 machines wouldn't see an increase under the proposal.

Leslie said her committee intends to “really look at the tax system” to make it less volatile. She noted that Gov. Brian Sandoval has said he will veto any increase in taxes, but she said he hasn’t talked about a structural overall of the tax system.

In the past, mining companies paid their net proceeds of the mineral tax the year after production. The last Legislature directed firms to pay in advance, in effect, with the state getting two payments in one year.

That law is expected to expire this year, but the governor has recommended the industry continue to pay taxes in advance.

Russell Guindon, principal fiscal analyst for the Legislature, told the committee that if the law wasn't extended for the next two years the state would not get any returns in 2012 from the net proceeds of minerals.

Senate Majority Leader Steven Horsford, D-Las Vegas, said he initially objected to the pre-payment in advance system. He said the net effect of the recommendation of Sandoval in extending the levy would be a tax increase for the mining company.

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  1. The 10 casinos in Pa. pay more to the state in taxes than the 216 casinos in NV pay. What's wrong with this picture?

  2. The State of Nevada should nationalize all productive mines and run them to provide for the state residents.

  3. The clause in the state constitution protecting mining operations from taxes is indeed fair game. There is no good reason at all for the mining companies to have such protection today. It will take at least 2 - 3 years for an amendment to be proposed and passed in the legislature and a special election, but it CAN be done.

    If nothing else, our state house should make adjustments to how net proceeds are calculated this session. There is nothing wrong with the mining companies making a profit, I support that to the fullest extent. But I want them to pay a fair share of taxes just like I do. It's called accepting one's responsibility as a citizen.

  4. Paul,

    Here is another good comparison you should think about.

    The casinos in Pa. paid out $233.23 million in total wages and benefits for their employees.

    The casinos in Nv. paid out $7.989 billion in total wages and benefits for their employees.

    The casinos in Nevada are also responsible for a major portion of the sales taxes paid in this state. Pretty much all the room taxes.

    Looking at raw "gaming tax" Pa. pays a bigger percentage but over all the gaming industry here pays about half of the total taxes in the state of Nevada.

  5. If the legislature truly wanted to show us that they are looking forward and want to be able to deal with our problems in the future they would take the steps necessary to repeal the limit on the mining tax. If they were to do that, we could have the chance to vote on it as early as fall, 2013.

    A simple repeal would not raise taxes, but it would remove the restriction so that it could at least be considered.

    If the legislature will not do this on their own, then we will not have a change have a repeal take effect until at least November, 2014, and that only after a successful petition drive in early 2012.

    It is much, much easier for the legislature to step up and give us the chance to vote on this.

  6. It seems that it would make sense to at least look at raising the cap on mining taxes. In some way, it would be nice if the cap were tied to the state's sales tax rate so that it cannot exceed the rate that people pay on their purchases. The mining companies would still have a cap and the we could raise taxes higher by also raising the sales tax rate. As for gaming, the comparison with Pennsylvania is not a very good one since gaming occupies a very different role in this state. If we want to slowly drive gaming down to the level that it occupies in other states, then lets try to get to their level of taxation. Plus, raising the gaming tax does not move us toward any sort of diversity in the tax base that we need. It actually makes it worse than today. Raising the mining taxes helps a bit since it would move that industry to a more significant share of revenue.