The Nevada Mining Association is poised to launch its political fight against an initiative that could triple the amount Nevada’s mines pay in taxes.
The association has filed papers to found a ballot advocacy to oppose the initiative by the Progressive Leadership Alliance of Nevada, or PLAN, and has a Web site at www.notaxscheme.com.
"We can’t live with that ballot initiative," said Tim Crowley, president of the Nevada Mining Association. "It is an industry-crippling, reckless initiative."
The PLAN initiative seeks to change the way tax bills for mines are calculated, a process set forth in the Nevada constitution.
Currently, mining companies are charged on the "net proceeds" from mines and the total amount paid can’t exceed 5 percent of the proceeds. Under the PLAN initiative, the wording in the constitution would be changed from "net" to "gross" and instead of a cap of 5 percent, mines would pay a minimum of 5 percent. The change from net to gross would eliminate what PLAN backers say is a major loophole that allows mines to deduct most of their revenue from taxable income and avoid paying their fair share of taxes.
Mining proceeds vary greatly depending on commodity prices. But had PLAN’s idea been in effect in 2008 mining companies would have paid an estimated $284.4 million in taxes on proceeds compared to the $91.8 million they paid under the current system.
With Nevada state government in dire straits thanks to the recession, the PLAN pitch has appeal to voters who want to see services such as roads and schools maintained but don’t want to pay a personal income or other tax.
The Nevada Mining Association, however, is planning to counter that message with a campaign of its own.
The mining group is publishing a "sustainability report" that will emphasize how mining companies are attempting to maintain economically and environmentally sustainable communities in the rural Nevada areas where they do business.
They’ll also attempt to counter the impression that gold and other precious metals drive the industry in the state. With gold and other metals fetching record prices voters are more open to the idea of taxing the business.
Crowley says they’ll remind voters that gypsum, a material used in wallboard, which is critical to the construction industry, is heavily mined in Nevada. They’ll also highlight that the initiative could raise taxes on the production of geothermal electricity, a popular form of clean energy that is favored by people on the left who might otherwise be inclined to raise mining taxes.
The three-page paper at www.notaxscheme.com lists reasons for voters to oppose the initiative under seven major headings.
Among them, it says higher mining taxes would result in the loss of "thousands of jobs" and be a "crushing tax burden" on geothermal energy production.
Officials from PLAN wouldn’t comment on the NMA’s arguments against the tax initiative.
The NMA has already challenged the legality of the initiative and in March a judge ordered a rewrite of the petition to clarify the language. The NMA is still challenging the proposal and a hearing is scheduled before the Nevada Supreme Court on June 7.
PLAN has until June 15 to collect 97,002 valid signatures to place the petition on the November ballot. It would need to be approved by voters in November and again in 2012 to take effect.