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.

More Taxes Coming On Mines In The U.S.

Bigger items in the Obama Administration's budget have naturally attracted more notice, but there's also an attempt to extract more money from mining companies therein. One of the items is a proposed 5% royalty on minerals extracted from lands owned by the U.S. government, which is expected to bring in only a few million dollars' worth of revenue annually. It's justified as bringing the mining industry into line with the purportedly undertaxed oil and gas industry, as well as with the coal industry.

The other is a demand for 200 million extra dollars per year from mining companies for cleanup of old mining sites, particularly the ones in the "Superfund" list of polluted places.


Luke Popovich of the National Mining Association had this to say:

“It’s virtually a statement that we don’t want to see any more minerals or metals mining beyond what exists,” he said.

“It’s the wrong direction for the highest cost mining region in the world,” he added. “This would really stifle new investment. In our case what’s particularly short-sighted about it — the United States has enormous mineral resources but we are increasingly importing the minerals.”

Well, there's always Canada. For those who like to keep score, the most mining-friendly jurisdiction is the province of Quebec.