Nevadans to Vote on Mining Tax Cap in 2014

UPDATE: The Nevada Assembly voted along party lines Thursday to allow a public vote on a resolution that would repeal Nevada’s longstanding 5 percent tax cap on mining net proceeds.

Five Assembly members took the opportunity to speak prior to the vote on Senate Joint Resolution 15. Assemblywoman Irene Bustamante Adams and Assemblyman Skip Daly both spoke in favor of the resolution.

“We acknowledge the history and the contribution made by this industry to this state, and for this reason we believe that the removal of the mining constitutional tax exemption should be determined by the voters,” Bustamante Adams said.

Assemblymen John Ellison, Jim Wheeler and Pete Livermore all spoke in opposition to SJR15. According to Ellison, the recent drop in gold prices and renewed efforts to pass SJR15 have led one mining company to lay off 125 employees and reduce work on one expansion project.

“Just this one bill has the power to close many of the small order mines around Nevada and can adversely change the way mining is done forever,” Ellison said. “Every county in this state has some type of mining, from Clark to Elko. My colleagues, I stand before you today, and I ask you to please consider the impact this one bill can have on our state and our economy.”

Assemblyman Daly acknowledged the important role that mining has played in the state’s history but stressed that he does not believe that a repeal of the tax cap would produce a change in mining activity in Nevada.

“We’re not going to lose mining jobs or mining industry or anything else. The minerals are here. The resources are here, and if there’s a market for those resources, mining will continue,” Daly said. “They’re not going to tunnel in from Utah.”

Assemblyman Livermore was the last to speak before the vote was taken; he reproached his fellow legislators, saying that he believes a large portion of the support for SJR15 is politically motivated.

“If it were any other industry, we would not be having this conversation in a time of crisis,” Livermore said. “Instead, we would be asked how to support that industry. We would vote to incentivize to help make struggling businesses succeed, but since it’s mining, we are doing the opposite.”

The resolution will appear as a ballot question during the 2014 elections.

[The following article was originally published on May 16]

by JERI CHADWELL As the price of gold hit its lowest level in a month today, the Assembly Committee on Taxation took a vote on a controversial resolution that would remove the state’s long-standing mining tax cap. Senate Joint Resolution 15 made its way through the Legislature during the 2011 session and needs only to pass in the Assembly before June 4 in order to go to a public vote next year.

After just a few minutes of discussion and an unanswered call for public comment, Assemblywoman Irene Bustamante Adams moved to pass the resolution. The move was quickly seconded and the committee went into recess after a 7-5 vote in favor of passage.

A handful of mining lobbyists and journalists were present in room 4100 of the legislative building when the committee took its vote, a mere fraction of the number who were in attendance during the May 2 meeting when legislators heard public comment from eight opponents of the resolution and seven supporters.

At present, mining operations in Nevada are taxed on their net proceeds—their proceeds after operating expenses. The rate of taxes on mining net proceeds was capped at 5 percent in 1989. Supporters of SJR15 say that the tax cap and other mining tax provisions reflect an outdated imperative from the days when mining was the state’s largest industry. Mining currently ranks as the 9^th largest industry in the state.

Nevada historian and former state archivist, Guy Rocha was one of the individuals who testified in favor of the resolution during the May 2 meeting. In his written testimony, he asked legislators to give Nevadans the opportunity to vote on the issue.

“In the end, let 21^st-century Nevadans decide if they want their elected representatives to decide mining tax policy and mining taxes or continue with a mining tax policy dictated by the state constitution first adopted almost 150 years ago under circumstances dramatically different than today,” Rocha said.

Opponents of the resolution point out that the 5 percent tax on net proceeds is not the only tax that mining operations pay. Like any other business, mines must also pay payroll, property, sales taxes, etc. Some opponents have also suggested that mining operations might actually pay lower taxes if the resolution were to pass and the tax cap were removed from the constitution.

SJR15 passed the Senate on April 1 in a vote of 17-4 and is expected to pass in the Assembly as well. If it does, it will be placed on the ballot for the 2014 general election.