Senate panel OKs lifting tax protections for mining
March 27, 2013
A Senate committee Tuesday unanimously approved a proposed constitutional amendment to repeal tax protections for the mining industry after a hearing peppered by testy exchanges between mining representatives and a Republican lawmaker pushing for higher mining taxes.
Senate Joint Resolution 15, first approved by the 2011 Legislature, would repeal a state constitutional provision that allows for the taxation of net proceeds on minerals. A 5 percent cap, added in 1989, is calculated after costs for extraction minerals and other business expenses are deduced.
Nevada Mining Association President Tim Crowley argued that repealing the mining provision would "cause significantly less revenue for state and local governments," and create instability in local economies and the mining industry.
"The constitution doesn't protect the industry," he said, adding that it allows for the taxation of mining "above and beyond" taxes paid by all industries, including mining.
If SJR15 is approved, he argued, the industry's 5 percent net proceeds taxes will be lowered to that of other property taxes.
That argument is in contrast to an opinion by a legislative lawyer who said net proceeds provisions are still in state statute and would be enforceable.
Crowley's testimony brought a terse response from Senate Minority Leader Michael Roberson, R-Henderson, who has said he'll push for higher mining taxes as an alternative to a business-margins tax that will appear on the November 2014 ballot.
Roberson pressed Crowley on whether the industry would sue the state over tax levies should SJR15 prevail.
Crowley said that decision would be left up to individual mining companies.
Under questioning by Sen. Greg Brower, R-Reno, Crowley said the Legislature has the power to impose other taxes on mining.
"You have the ability to tax us with sales taxes, modified business tax which we pay. Should you implement a margins tax, the mining industry would pay that. We are not immune to taxation," Crowley said.
Lawyer and mining industry lobbyist James Wadhams argued that instead of taking mining out of the constitution, SRJ15 would put it back in.
"If passed, mining will be treated like all other property owners," he said.
Roberson wasn't swayed.
"I have a lot of respect for your intelligence. I'm just not sure you have a lot of respect for our intelligence," he said.
He added, "We're just not convinced by your arguments."
Sen. Ruben Kihuen, D-Las Vegas and chairman of the Revenue Committee, asked Wadhams if he feels in the industry pays its fair share of taxes to the state.
"Yes, sir," Wadhams said.
Kihuen noted that other states charge higher rates, though they may be calculated differently. But Wadhams countered when it comes to overall tax rates on hard-rock mining, "Nevada falls in the middle."
Brower, who voted against SRJ15 in 2011, voted for it Tuesday.
"The fact is mining does pay taxes. Mining pays a lot in taxes," he said. "The issue in SJR15 is whether mining tax policy should be determined by an old restriction in the constitution or this Legislature, the representatives of the people.
"My opinion on this issue has evolved," he conceded, adding it's time to "bring control of taxation back to the Legislature."
SJR15 now goes to the full Senate. If ultimately approved by the Legislature, it will go to voters for ratification in 2014.