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By Anjeanette Damon (contact) 
Saturday, June 4, 2011 | 4:58 p.m.
Sun Coverage
In a last ditch effort to keep lawmakers from eliminating some of the industry’s priciest tax deductions, a handful of the state’s largest mining companies are offering to make a one-time cash payment to the state.
In a budget deal reached between legislative leaders and Gov. Brian Sandoval, the mining industry would be on the hook for about $23 million in additional net proceeds taxes to the state and $23 million to counties with mining operations.
To raise that revenue, a bill sponsored by Senate Majority Leader Steven Horsford, D-North Las Vegas, would eliminate a slew of questionable deductions the mining industry has been taking.
Mining lobbyists, however, oppose Horsford’s effort to eliminate deductions for medical insurance and sales tax—which would cost them about $12 million a year.
Instead, a handful of large mining companies, including Barrick and Newmont, are offering to make a one-time cash payment to the state of about a $12 million.
Legislative lawyers, however, cautioned lawmakers that such a move is not legally possible.
Assembly Speaker John Oceguera, D-Las Vegas, said he is willing to discuss the offer, but won’t scuttle the budget deal—which relies on the mining revenue—if Horsford rejects the offer.
It’s unlikely Horsford, who has spent the session fighting for clarification on mining industry deductions, would give on his legislation.
How is this cash offer different than a bribe?
I used to think the politicians in the east were corrupt and without morals, but since coming here I see I am mistaken. They do stuff here, that would never even be thought of back east.
The Constitutional protection for the mining industry and the state laws that allow huge deductions need to undergo changes. I am not advocating the Alaska solution of a 25% royalty on oil companies, although based on recent earnings reports, that doesn't seem to have had a negative effect on their profits.Two mining companies are planning on opening mines in the Comstock Lode and the Carlin Trace.
The issue was highlighted in a recent power point presentation at the Barrick Mining annual meeting. One of the mines highlighted in the power point was the Cortez Hills Mine in Northern Nevada. According to the power point, in 2010, the mine produced 1,140,000 ounces of gold (over 35 TONS) at a production cost of $312 per ounce. During the first quarter of 2011, the mine produced 366,000 ounces (over 11 TONS) of gold at a production cost of $220 per ounce. If you project a sale price of $1000 over cost of production,that results in a profit of over $1,500,000,000. Based on what the mining industry paid in taxes in 2009, the tax payment to the state of Nevada will probably be less than 50,000,000. The power point goes on to point out that the projected production from Cortez Hills for 2011 will be between 1.30 to 1.45 MILLION ounces (40-45 TONS)at a production cost of $235-245 per ounce. This is natural resource that should provide significant benefits to the citizens of Nevada. Unless the Legislature acts quickly, another two years will pass without any significant action to change the tax structure of the state.
In 2009, the mining industry paid 48,600,000 on gross revenue of 5,800,000,000. In 2010, the gaming industry paid 416,000,000 on gross revenue of 5,800,000,000. Mining pays about 10% of what gaming pays in taxes.
to fall in love with wealth itself and live a life of greed....thank you for bringing back the mentality of the gilded age, mining companies.
Someone should picket the CEO's house.
Remove the special interest protections from the state constitution and tax mining like everyone else!
If I have to cry when I pay my taxes, everyone should cry the same. No more, no less. That's all I ask.
So they offered a one-time payment of $23 million in exchange for $23 million per year in perpetuity. Talk about an offer the state can't refuse.
It's utterly mind blowing sense of self-important the mining industry has developed. That kind of cockiness only comes from decades of enabling by Nevada politicians.
Please Nevada...end it now. Start treating mining and gaming like everyone else. Or, treat everyone else like mining and gaming. But don't give these folks the golden treatment at the expense of every other person and industry in the state.
$46 million is about 1% of their Gross Income. When has a wage slave ever paid just 1% of their gross income in taxes, including Property Tax?
Even with a 1% - $46 million/year tax payment, they are renting the mining land for almost nothing. They should be paying 5% MINIMUM...or go somewhere else.
Averaging in the past 4 years of non-payments, they are probably paying only about 1/4% of their gross receipts. No shared gains, no shared sacrifice.
MINING'S proposal is an absolute JOKE and INSULT to the People of NEVADA!
Let's change the Nevada Constitution, to fix these archaic laws that were written over 100 years ago that no longer fit modern times, nor the changes that have happened over that time with Nevada's population growth!
Mining has paid a pittance, and prospered on the backs and goodwill of the Citizens of Nevada for over a century with MINING foreign and out of state owners exploiting Nevada's precious and semi-precious metals and minerals.
There is something terribly wrong in the MINING INDUSTRY'S offer, one which dangles cash in front of a hungry and hurting state for a lousy deal--just another exploitation.
MINING is one of the reasons we are in this budget mess---if they had been paying their fair share over the past 100 years, our state would be the envy of all the USA! SHAME SHAME SHAME
At the very least, MINING should be paying at least an average amount of what they are paying in the other 49 states. That would be FAIR. The good People of Nevada deserve nothing less!
If this offer is accepted, any politician associated with the deal should be kicked out of office and thrown in prison for corruption. This would be so blatant, like someone else said, that it would be a complete slap in the face to NV voters.
Oceguera should be beaten with a stick (figuratively) for even considering the offer. What a complete insult.
Mining can pay 5% GROSS minimum.
No deductions for anything!
Period- end of story- no auditors.
Use profit statements mines provide for investors as well.
Very simple math-
9 Billion in sales = $450 million for Nevada.
10 Billion in sales = $500 million for Nevada.
Our gold first- at least it should be.
It's interesting...all of the talk about diversifying our economy, and what we can do to attract new businesses. This is an industry that we do NOT need to attract. We have something that they want. Yet the preferential treatment they get is criminal. These good ol boy politicians that allow this need to be booted out.
Don't take the bribe. Change the Constitution and make them pay from now on. It will be very profitable for the future of our state.
Teachers, we get out of school in 5 days. Write your legislators and let them know about our summer project. RECALL all legislators who failed to support education, and tax reform issues. I have sent an email to my representative John Hambrick and my Senator Barbara Cegvaske informing them that they are the winners in my recall petition contest.
Hahaha! Now they want to play "Let's Make a Deal!"
Time for mining to pay its fair share . . . no more crumbs. Come to the table and pass the whole loaf of bread, BILLIONAIRES!
I really don't understand mining at all. Maybe someone can explain to me why anyone can go dig somewhere in Nevada and just take anything they find. Who does the stuff (in this case, the gold) belong to? If it belongs to the state, then perhaps the state should contract out the prospecting, mining and refining to the lowest bidder and keep the gold in the treasury. Let the free market determine who gets the job and for what price, but the gold stays with the owner. The state.
Please explain why this doesn't make sense.
As many have stated here it is time for the Mining Industry to pay their fair share. It would be interesting to know what politicians are in favor of accepting the $23 million.
In many third world countries where I have done business over the years, the bribe is quite commonly accepted as the way transactions are introduced.
Even when you are clearly in the right, it is a frequent method. For example in Bali once, a money changer shorted me a couple a hundred dollars worth of rupiahs. I called the cops, bribed the guy 50,000 rupiah ($5.00 American - about a whole day's pay for him) and we went to the money changer. I said he cheated me. He handed every penny he owed without blinking. We parted.
This effort by Mining officials is no different, just a sleazy way to circumvent paying their fair share and to lower the total bill, particularly now that both legislators and the general public are discussing current, future and back taxes owed to the state for hauling off precious metals by the ton and paying a pittance to the state after HUGE deductions for incredible salaries, bennies, etc.
Even if they could weasel this thing through, it would set a sleazy example of how to dodge the laws, and it would frustrate guys like boftx and me who actually DO pay their taxes!
It smells like 'back-room' deals, slimed with greazy 'walking around money' and promises of special treatment down the road. "And I promise to pay you after we have sex!!"