Las Vegas Sun

March 28, 2024

Q+A: Voters’ guide to mining tax ballot question

Finding Nevada: Gold Mine Tour

Matt Hufman

Driller Paul Sierra works 2,000 feet underground at the Newmont Mining Corp.’s Leeville mine west of Elko on Sept. 26, 2013. In the reflection of the cab of his drill is operations superintendent Ian McMullan.

Should the mining industry's tax rate be protected in the Nevada Constitution?

Voters will decide the answer on the Nov. 4 ballot.

The constitution says the mining industry will pay no more than a 5 percent tax on the net proceeds of minerals. If voters remove the net proceeds provision, the Legislature could impose whatever tax rate it pleases.

Like all tax debates, the mining issue is complex, confusing and really important for funding public services.

At its core, though, the mining tax debate hinges on simple concepts: Proponents say the industry enjoys an exclusive tax break and could afford to pay more. Opponents say the industry pays its fair share.

Why are voters deciding this now?

The Legislature passed a joint resolution in 2011 and another in the following session to put the question on the ballot. When the Legislature passed the resolution four years ago, mineral prices were strong and the state’s financial position was weak. Nevada faced a $2 billion shortfall in the wake of the recession. Taxing commodities was an option to fill the fiscal gap. The price of gold, one of Nevada's top minerals, peaked in 2012 at $1,800 per ounce. It has leveled to around $1,287 per ounce.

Would this be a a new tax?

No. If passed, the measure would give the Legislature the ability to raise taxes on mining. But the vote itself would not create a new tax.

What is a net proceeds of minerals tax?

It’s complicated. But here’s how the Nevada Taxpayer Association, a nonpartisan and nonprofit group, describes it: A property tax assessed on minerals mined or produced when they are sold or removed from the state.

A handful of deductions are available for the companies to reduce their costs. Though it is mostly associated with mining metals and minerals, the tax also hits oil, natural gas and geothermal energy.

How important is mining to Nevada's economy?

In terms of gross domestic product, it is 6.1 percent of the Nevada economy and the fifth-largest industry behind the entertainment, real estate, government and retail sectors, according to the U.S. Bureau of Economic Analysis.

What does mining currently pay in taxes?

The net proceeds tax generated $159.4 million in 2013, according to the Nevada Mining Association, the industry's trade association. About 96 percent came from silver and gold. The mining industry also pays sales, property and modified business taxes like other companies in the state.

How much gold comes from Nevada?

About 75 percent of the nation’s gold production comes from Nevada. In 2013, the state produced 5.4 million troy ounces and the average price per ounce was $1,200, according to the Nevada Mining Association.

If the question passes, what happens next?

Technically, the 5 percent tax would disappear, leaving at the least a $159 million gap in the budget. But lawmakers took care of that problem. In 2013, the Legislature passed a contingency bill to preempt any problems if the ballot measure passes. Senate Bill 400 puts into law that mining companies would be forced to pay the 5 percent net proceeds tax.

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