Group seeks to boost mining taxes in Nevada

CARSON CITY -- Nevadans could be asked this year to boost mining taxes but the money wouldn't come in time to rescue state and local governments from a severe recession.

The Progressive Leadership Alliance of Nevada intends on Tuesday to file with the secretary of state an initiative petition that, if approved by voters, would impose much higher taxes on the mining industry.

PLAN state Director Bob Fulkerson said Friday that the petition would change the state constitutional requirement that limits mining taxes to 5 percent of mining companies' "net" proceeds, or what is left after they deduct most of their expenses. Instead there would be a minimum tax of 5 percent on their gross revenue.

Legislators could decide later to increase the tax rate above 5 percent.

If the new tax had been in effect in 2008, state and county governments would have shared $284 million in mining taxes, according to Fulkerson. Instead they shared $79 million.

But the tax increases he 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.

"This is not enough to solve the state's budget problems," Fulkerson said. "The idea is to stop an unfair tax situation. Mining has had a privileged status in Nevada since statehood."

He anticipates the Nevada Mining Association will "spend millions" of dollars on court challenges to the petition and additional millions on a public campaign opposing the petition.

Nevada mines produced commodities worth a record $6.1 billion in 2008, according to the state Division of Minerals. Gold mining produced $4.97 billion of the state total.

Tim Crowley, president of the Nevada Mining Association, anticipated the PLAN petition and immediately released a statement in opposition.

"Undoubtedly, more changes need to be made to Nevada's tax structure," he said. "Yet, study upon study has shown that industry-specific taxes are foolhardy. The state already suffers the consequences of relying too heavily on the gaming industry. Placing a disproportionate reliance on mining, which already pays an industry-specific tax in addition to all conventional business taxes, would further exacerbate Nevada's tax structure problems."

Crowley said mining provides high-wage jobs to 14,000 Nevadans at a time when jobs are hard to come by.

Unemployment in mining counties is 6.5 percent, compared with more than 12 percent statewide, he said. Gold mining largely occurs in Eureka, Elko and other counties in Northern Nevada.

Mines in Nevada produce 80 percent of the gold mined in the entire country. Gold sold Friday for $1,131 per ounce, near its all-time record. Between 6 million and 7 million ounces of gold are extracted each year from Nevada mines.

During recent legislative sessions, PLAN lobbyists campaigned to increase taxes on gold. But legislators gave little consideration to their requests, even though in public forums held before the 2009 session many residents called for higher mining taxes.

Gov. Jim Gibbons, a former mining industry lawyer and geologist, said several times last year he would veto any legislation to tax mining more.

"Their unwillingness to tax mining showed us that the only way taxes will be increased is through a vote of the people," Fulkerson said.

But a poll taken for the Review-Journal in May showed more respondents opposed a higher mining tax than favored it. Just 41 percent of respondents supported a higher tax, compared with 46 percent who opposed it. The rest were undecided.

Brad Coker, managing partner of Mason-Dixon Polling & Research Inc., the company that conducted the poll, said the recession has made people rethink business taxes.

"People are worried about their jobs and don't want to hurt business more since they might lay off people," he said.

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

Doug Driesner, a staff member at the Nevada Division of Minerals, said imposing more taxes on mining could lead to negative consequences.

Though most gold in the United States is mined in Nevada, Driesner said, gold is found in many countries around the world and in states such as Alaska and Utah.

Mining companies might look there if they felt the Nevada tax was too high, he said.

He said more exploration will occur in other states if the Nevada tax is increased.

Contact reporter Ed Vogel at evogel@reviewjournal.com or 775-687-3901.