Mining tax measure turns into legal debate
May 2, 2013
Consequences of removing constitutional tax measures for the mining industry was the focus of lengthy debate before an Assembly panel, with the mining industry saying it would reduce their tax burden and legislative lawyers saying otherwise.
Senate Joint Resolution 15 is at the crux of the whole tax debate at the Nevada Legislature.
The state constitution currently caps net proceeds of minerals at 5 percent. Net proceeds are calculated after the cost of extracting minerals and other expenses are deducted. SJR15 would repeal that provision.
Legislative lawyers told the Assembly Taxation Committee that if SJR15 is ultimately passed and approved by voters, the industry's tax obligations would still remain under statute until changed by the Legislature.
"Courts generally apply the rule that, if you challenge a tax, you have to pay the tax while litigating," legislative lawyer Kevin Powers told the committee.
"If a mining company wanted to challenge, they would have to continue to pay the tax under protest," he said. "If they stopped paying the tax, they might lose their right to challenge the tax."
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But mining industry representatives said their net proceeds tax burden would revert to a lower tax rate paid by other property owners, costing the state and rural counties money.
Tim Crowley, president of the Nevada Mining Association, said SJR15 "dismantles the current system, a system that provides significant resources to the state," as well as rural counties.
Passage, he said, "will halt revenue to the state."
SJR15 was approved the 2011 Legislature and has cleared the Senate this year. If passed by the Assembly, it will go to voters in 2014.
Crowley tried to counter critics who argue that mining doesn't pay its fair share in taxes.
"In some ways that's true," he said. The industry, he pays "four times more" the average taxes levied on other businesses.
Besides net proceeds, mining also pays payroll, sales and all taxes imposed on other businesses as well, he said.
Rural representatives also urged defeat, arguing mining contributes to their local economies.
But their arguments drew the ire of Southern Nevada lawmakers, who pounced at the suggestion that rural mining economies propped up the rest of the state and were being threatened by the populous south.
"I came here today to try to have a fair hearing, not make it personal," said Assembly Speaker Marilyn Kirkpatrick, D-North Las Vegas. "Now I feel it's personal.
"I represent 64,900 people who see their gaming dollars going this way," she said, referring to Southern Nevada's might as the state's gambling and tourism mecca. Sales and gambling taxes paid by casinos make up about half of the state's general fund.
Sen. Michael Roberson, who is leading an effort to raise the tax on gold and silver mine operators to 10 percent, urged the committee's support.
"I think you are all smart enough to discern the truth today," the Henderson Republican said, telling the committee they shouldn't believe "those who tried to deceive you."
No action was taken by the committee.