Halt sought to mining petition

The trade association for Nevada's mining industry filed a lawsuit Tuesday to block a petition that would allow the state's voters to raise taxes on mining.

The filing in District Court in Carson City by the Nevada Mining Association is in response to an initiative launched by the Progressive Leadership Alliance of Nevada, a group that advocates for "social, economic and environmental justice for all Nevadans."

On Jan. 19 the activist group, which goes by the acronym PLAN, 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 lawsuit filed by the mining association says the PLAN proposal violates rules requiring voter initiatives be limited to one issue, runs afoul of fair taxation provisions in the state constitution and doesn't disclose that proposed tax increases for mining could also apply to geothermal energy development.

The mining association also says that under the proposed changes, mining companies would be forced to pay a tax based on the sale price of a mineral at market without regard to the cost of getting it out of the ground.

"It reflects the simple truth that mineral property must be located, extracted, refined, and processed; it is not just lying around in the valleys of Nevada waiting to be picked up by passers-by," the mining association filing said.

The filing seeks to block the initiative from moving to a statewide vote in November.

Launce Rake, a spokesman for PLAN, said the group is standing by the initiative because activists consider Nevada's current tax system "a tragedy" for children and the poor.

"We're obviously reviewing it, but we believe our initiative is very well-written and will easily withstand this legal challenge," Rake said in response to the lawsuit.

Rake said a PLAN attorney was still reviewing the 65-page filing, including attachments, and was not yet ready to respond in detail.

The initiative is an attempt by PLAN leaders to bypass members of Nevada's political establishment who they contend are overly influenced by the mining industry.

If voters were to approve the initiative in the 2010 and 2012 general elections, PLAN organizers said, the change could raise as much as $250 million annually that could be spent on schools, social services and health care.

They said that proceeds from gold totaled $25.5 billion from 2000 to 2007 and that mining companies paid $125.3 million in taxes to the general fund, for a rate of one-half of 1 percent.

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

Among legal issues the mining association highlights in its filing is Nevada's "one issue" requirement for petitions. The mining association argues that by changing mining tax requirements from "net" to "gross" proceeds and calling for a tax of "no less than" 5 percent as opposed to the current tax of "no more than" 5 percent, PLAN seeks to change the method and rate by which mining is taxed.

"Under a single-subject analysis, Proponents can attempt one or the other, but not both, in a single petition," the filing said.

The mining filing also accuses PLAN of failing to disclose the implications of proposed changes.

According to the mining association, geothermal energy producers are also covered by laws governing mining.

"Proponents fail to explain, therefore, that one of the most promising green industries providing reliable, sustainable, and environmentally-friendly electricity would not only be affected but likely crippled by the Petition's taxes," the filing said.