Group seeks higher tax on mining

Calling Nevada's tax system "a tragedy" for children and the poor, an activist group will ask voters to stake a bigger claim in mining, one of the state's most politically entrenched industries.

The Progressive Leadership Alliance of Nevada on Tuesday filed an initiative petition to ask voters to amend the state constitution to include at least a 5 percent tax on gross proceeds of mines, as opposed to the current tax of no more than 5 percent of net proceeds.

The change, according to PLAN organizers, could raise as much as $250 million annually that could be spent on schools, social services and health care. They say proceeds from gold totaled $25.5 billion from 2000 to 2007 and mining companies paid $125.3 million in taxes to the general fund, for a rate of one-half of 1 percent.

In contrast, PLAN says the poorest 20 percent of Nevadans pay 8.3 percent of their income in taxes.

"It is time for that to end. We need a restructuring, a fairness-based tax system here in Nevada," PLAN organizer Michael Ginsburg said.

Opponents in the mining industry say if the petition is approved it could undermine one of the few successful parts of the Nevada economy that employs 14,000 people directly and another 51,000 indirectly.

The proposal seeks to bypass the state's politicians, who PLAN activists say are overly influenced by mining companies, and take the issue directly to voters.

"Our support is coming from the rank-and-file members of both parties," said PLAN spokesman Launce Rake.

The outside approach has upset politicians, candidates and mining industry officials who say it raises taxes on mining 300 percent. Senate Minority Leader Bill Raggio, R-Reno, said the initiative process should not be used to raise taxes.

"I'm not much in favor of taxation by initiatives, regardless of what the issue is. I think it is poor policy," Raggio said.

He said mining taxes will be included in a tax study already in progress. He also said legislators could change the definition of net proceeds and potentially reduce the number of deductions that result in lower tax bills for mining companies.

The tax changes the group envisions would not come in time to deal with a potential $450 million deficit facing the state this year. Before the tax could be increased, voters would have to back it in the 2010 and 2012 general elections. Higher mining taxes could not be imposed before 2013.

The group needs to secure 97,002 valid signatures by Aug. 4 to put the proposal before voters in the November election.

All the Republican candidates for governor, incumbent Gov. Jim Gibbons and his primary challengers Mike Montandon and Brian Sandoval, oppose the initiative. So does Democratic candidate Rory Reid.

In a written statement, the Nevada Mining Association said the industry supported tax increases in 2003 and 2009. It also says it pre-paid $90 million in taxes in 2008 to help the state make ends meet.