Tax panel sets vote to do away with some deductions for mining companies
The Nevada Tax Commission is set to vote Dec. 12 on regulations that will significantly reduce tax deductions mining companies now enjoy.
The changes were ordered by the 2011 Nevada Legislature in Senate Bill 493. Lawmakers objected when they learned that mining companies were taking deductions for numerous costs that, lawmakers contended, have nothing to do with Nevada mining operations including executive salaries, bonuses and benefits as well as such things as travel by corporate officials who aren’t even located in Nevada.
The new rules limit deductions from the Net Proceeds of Mines Tax to activities directly related to Nevada mining operations. The regulations prohibit mining companies from taking deductions for state, federal and local taxes. The rules also prohibit deductions for costs of activities “outside the area of the mine plan,” including exploration and reserves.
Under the new rules, deductions for employee housing and reclamation are also gone.
Jim Wadhams, representing the mining association, said the changes will cost mine companies as much as $48 million a year. He said the changes to the deductions from the Net Proceeds of Mines Tax, which is actually a property tax, eliminate the ability of mines to use those deductions to lower the taxable value of their mining lands.
The revenue is split between the state’s General Fund and local governments based on each county’s property tax rate, with counties getting their share off the top and the state getting the rest of the money.
Mining company officials, the Nevada Mining Association and taxation officials have been working on the new regulations since the session ended in June.