Mining tax increase touted

RENO -- Taxes on mining in Nevada should be increased as a way to avoid future cuts in state spending, at least five speakers told a legislator Monday night.

"It is inexcusable not to have any kind of real taxes on gold," retired Reno engineer Jerry Purdy said during a public meeting called by Assembly Speaker Barbara Buckley, D-Las Vegas.

Buckley is holding town meetings across the state to gather input from Nevada residents on how to bail the state out of its worst budget crisis in generations.

Since January, legislators and Gov. Jim Gibbons have cut state spending by $1.2 billion to make up for revenue shortfalls caused by the economic downturn.

Gibbons has warned that the state might have to cut spending by another 14 percent when the Legislature goes into session in February.

Because of continuing shortfalls in state tax revenue, Buckley told a crowd of 200 at the University of Nevada, Reno student union that the cuts could be as high as 20 percent.

Buckley did not recommend any new tax increases during the meeting. She just said legislators no longer can afford to grant tax exemptions and abatements because every dollar lost means a dollar less for education, health care and public safety programs. She added that the Legislature has approved abatements and exemptions for good purposes through the years without considering the impact of the lost revenue on the state budget.

Members of the audience pointed out that the mining industry contributes only a small fraction in state taxes at a time when gold prices are booming.

Richard Siegel, a longtime leader of the American Civil Liberties Union of Nevada, noted a recent report that said the mining industry generated $5.5 billion in income in 2007 and yet contributes less than $100 million in state taxes.

David Ward, a Reno City Council candidate, also recommended mining tax increases, saying they should be indexed to the price of gold. When gold prices are high, mining would pay more. When prices are low, their taxes would be less.

Earlier this year when gold topped $1,000 an ounce, Gibbons, a former mining geologist and lawyer, vowed to veto any bill that called for increasing mining taxes in 2009.

Mining companies paid $62 million in a 5 percent tax on their net revenues in 2006, of which the state's share was $30 million. Nevada mines produce more than two-thirds of the nation's gold.

"Many states charge a royalty or windfall profits on gold and other finite resources being removed, but not Nevada," Purdy said "When the resource is gone, it's gone forever, along with the mining companies and any windfall profits tax revenue."

While tax increases are anathema to many legislators and Gibbons during this recessionary period, retired UNR Professor James Hulse noted that in 1955, the Legislature approved the first sales tax -- a 2 percent tax -- in the wake of widespread business opposition. A group of mothers banded together to stress the importance of properly funding education, he said, and they defeated efforts to kill the tax in a ballot question during the 1956 election.

A similar crisis faces education today, said Hulse, although he did not know what type of tax increase should be considered.

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.