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Friday
APRIL 26
2019
Posts Tagged ‘eureka’

Mining Tax Cap Elimination Gains Support and Another “Claim Tax” Deemed Unconstitutional

The Nevada mining and minerals industry is really on a roller coaster these days.

Those in Nevada opposed to the elimination of the tax cap put on state net proceeds of mines (Constitutionally at 5% currently) are likely none too happy with state Senators Ben Kieckhefer (R) of Reno and Michael Roberson of Las Vegas (R) as they cross party lines and join the Democrats in support to amend the Nevada State Constitution.  The movement partially-known as the “Fair Mining Tax,” soon, it will be going to the State Assembly for a vote: we’ll just have to wait and see what turns out. If voted in-favor, it would be required to be approved by State Legislature in 2013, and then put on the election ballot in 2014. Incidentally, the two main groups behind changing the constitution to eliminate caps on mining taxation are the Nevada Teachers’ Association and the Progressive Leadership Alliance of Nevada. It’s another polarized political push in the name of perceived “good.”

Why is this happening in such a fiery manner? The unthinkable has perhaps happened: Casinos are failing, and we’re going broke. We got too used to one industry padding our system here in Nevada, and with few to choose from, we’re asking old ideas to work with a different industry rather than fixing the problem.

It’s true, I’m one of those none too happy, as someone who makes a living doing geotechnical assistance for minerals exploration in this state, it means one of two things to me. The first being that these tax-cap percentages are now unhindered, and mining opponents, the kind of people who apparently dislike working Nevadans, have access to push through taxation on Nevada’s best job opportunities and state growth potentials. Taxes are almost never lowered, they’re re-named (as I’ll go into on another subject below) and raised, often without representation, but usually they just get higher, usually due to increased spending, thus, more hands get held out. The second being what those taxes actually mean to the producing mines (who they are intended to penalize—-and I choose that word carefully) and what that means on down the chain of economics in Nevada. Workers get thinned out, hours cut, benefits reconsidered, less possibility of mine (and then job) expansion, etc. That’s just at the surface. Likely, the workers will then blame the company (they’re not accountants, nor would they want to be), possibly form unions because they’re “being treated badly,” and force what they once had, further buckle the company…okay, that’s extreme. It’s also how these things can happen.

Back on my side of the fence, if larger companies can’t invest in us little guys because they’re paying taxes, well, we don’t get the clients, we don’t get hired, and then we don’t pay our taxes, and then we go out of business and collect unemployment. Again, extreme, but that’s a timeline of possibility. Even half of those in my fine hyperbole might be a bad thing, and certainly isn’t good for a shaky economy, statewide or even nationally. This is just my opinion.

On the other hand, wouldn’t more taxes for Nevada be good? It’s my argument and understanding that a tax dollar is a tax dollar. It can come from anywhere if we put our minds to it. Usually, our simple minds look at simple numbers, say, the price of gold, and immediately (and seemingly sensibly) put two and two together: Our state mines, gold is at an all-time high. Sure, the big production companies are doing well. Will they in 10 years? Gold has a bad habit of not staying the same in price: that’s why the Mining Law of 1872 and helpful things like 5% caps on mining taxes in Nevada are there. If gold goes back down to $200/oz, Nevada will be stuck paying 8%, 10%, 25% taxes on production: which means, we’d be broke either way, if we’re as broke as we are now AND suddenly gold takes a dump. It won’t support us, and it will punish our industry. What a wonderful thing if you just happen be anti-mining ala Bob Fulkerson.  Masquerading as solutions equates fanatical success–don’t let spun, misleading pie charts fool you.  What mines pay in other taxes and fees outside production is WHY the taxes are what they are.

In good news, in an emergency session last year, not known much by the public, known to the chagrin of mining claims holders, a “fee” on all mining claims in the State of Nevada.  This has recently been deemed unconstitutional by a Carson City judge. What is this “fee” you ask? It happened to be a fee of as low as $70 and as high as $195 per mining claim filed with the BLM, handled by the county, and piped right into the state’s “general fund.” That’s right, it was a tax that was dodged by use of wording (aka, “fee”), was not voted on whatsoever, and blew right past everyone to become law. The only repercussion of not paying this fee was…yep, more fees. It was really causing havoc with the counties (as they were responsible for collecting the money and doing the paperwork…the state just sat back and watched the unconstitutional tax money roll in) and the smaller mining companies.  They had no idea who was in charge of what, or what would happen if they were late, or didn’t file. Ah, but finally enough protest and uproar from the counties and claim owners went to court, and now these taxes are on hold until further notice. My question is now, what about the money they collected unconstitutionally? When will we be seeing that returned?

Mines are expensive to run. It is not the same as oil producing, log cutting or any of the other industries that produce raw materials that come from the earth. Profit gained based upon money spent by said company is usually not in favor of the industry, with exception to rare times like we’re in currently. It’s a bust or boom industry, it always has been: fat or famine. Mining, as an industry, are among the most environmentally-scrutinized, safety-necessary and harrowing jobs out there. They indeed can be clean, profitable and beneficial, especially to our state.  It’s the only industry that actually cleans up other old mines, sets aside wildlife sanctuaries and wetlands, and makes an attempt to give back (…casinos don’t even do that!). This is why we have to be very careful about what are “fees” and “taxes,” and why they are there.

I believe we as Nevadans owe it to mining to scrutinize our politicians and the obstructionists that would like nothing more than for mining to just pack up shop and head to China, make sure we know what their real angles are, look beyond the words “Fair!”  “It’s for Nevada!”   “It’s for the people!”   “It’s for the earth!”    Mantras that have been used as leverage for years.  We need Nevada MAKING something again—-something besides tax laws: we all know how great California’s doing. Traveling this truly vast state,  I know there is plenty of Nevada for all of us, as citizens, nature-lovers and industry folk alike (which to my reckoning is all of us), and we can, in fact, get state revenue without punishing someone else.

(info from mineweb.com — a great resource for all news Nevada mining)

(image WSJ)