Horsford proposes legislation to close mining tax loopholes

By Anjeanette Damon

Wednesday, May 18, 2011 | 4:55 p.m.

Senate Majority Leader Steven Horsford, D-North Las Vegas, today proposed legislation aimed at ending the ability of the mining industry to convince state regulators to expand its tax deductions beyond what is allowed in state law.

Horsford’s legislation would specifically eliminate some deductions being claimed by the industry despite the fact they don’t appear in state law. It also seeks to tighten the regulatory oversight so the industry isn’t able to exploit confusion between the law and regulations in order to lower its tax bill.

An investigation by the Las Vegas Sun into the industry’s ability to expand its tax deductions found regulators often sided with industry lobbyists over their own legal counsel and staff to approve tax breaks that aren’t specifically authorized in state law.

“How can we say it is working and it is effective?” Horsford said of the way tax regulations are developed. “What we have now isn’t being followed and we’re losing money.”

Horsford was unable to provide a figure for how much revenue the state has lost because of the questionable deductions claimed by the mining industry on its net proceeds of minerals tax.

State law allows the industry to deduct costs specifically associated with the extraction and processing of its minerals. But over the years those costs have grown to include such things as employee housing, travel, corporate office expenses and sales taxes.

Horsford’s amendment would clarify what is and isn’t acceptable, a debate the mining industry says it’s willing to have.

“We don’t object to clarifying the law and making the rules clear to everybody, including the taxpayer,” said Tim Crowley, president if the Nevada Mining Association. “That is to our benefit as well.”

But Crowley equivocated on some of the specific deductions Horsford seeks to end.

In a letter he wrote in April, Crowley acknowledged that travel deductions, for example, “may not be relevant to the value of the mineral” and should be excluded.

In a hearing Wednesday, however, he argued much of the industry’s travel should remain deductible.