Friday, April 8, 2011

Nevada Legislature Scrutinizing Mining-Company Deductions

It's an old rule: no matter how mining-friendly the jurisdiction, mining companies making more money due to higher metal prices will get politicians looking for ways to extract more revenue for their own spending plans. Ofttimes, a tax increase or royalty hike is the means of extraction. The Nevada legislature isn't going that far, but they are looking at deductions that seem contrary to sense.
The reason behind continuing net proceeds of mines tax deductions for advertising, fire insurance, and other non-minerals extraction-related deductions had some members of the Nevada Assembly Taxation Committee stymied Thursday....

Meanwhile, the Nevada Mining Association stood firm in the belief that the industry should not be singled out for increased taxation even during a global economic crisis that has left Nevada's state and local government and school district budgets slashed to the bone in the Silver State.

Proponents of dropping the deductions unique to Nevada mining operators told lawmakers that some operators have paid "no taxes at all on mine production," even though the operations had been audited by the State Department of Taxation.

Ducking out of taxes through use of the tax code is the standard drum beat in American for a tax hike of some sort. The Nevada legislature may not succeed, as mining taxes are limited by the Nevada Constitution, but there's a push to amend it so as to extract more tax revenue from the industry.

So far, there's been no legislative action - but it's easy to see which way the wind is blowing.

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