Why Mining Taxes Won't Likely Be Changed

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Why Mining Taxes Won't Likely Be Changed

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Dave Parker

The Nevada Legislative Building

The biggest reason mining taxes will probably be left alone is because they are constitutionally protected in Nevada.

This goes back to statehood in the 1800's. The tax lawmakers are looking into is called the net proceeds tax, and it's complicated to say the least.

Basically it's a type of property tax mines pay on the value of what they pull out of the ground, which belongs to the people.

The tax on minerals is capped in the constitution at five percent of the value at the first place a mine sells it.

Over time the mining lobby has been able to add a series of deductions for themselves. This allows them to write off some of the costs of getting the mineral out of the ground. That covers everything from exploration to advertising.

Democrats have tried unsuccessfully to undo those deductions before, and Senator Sheila Leslie says they may very well try again.

Sen. Leslie: "We can look at the deductions to a certain extent. I'm not sure it's going to generate the amount of revenue that many of us would like to see come from the mining industry."

But the mining industry seems unwilling to look at it. Nevada Mining Association's president Tim Crowley says the point of the deductions is to find the true value of what's being mined. He uses home property taxes as an analogy.

Crowley: "Your house is worth $500,000 today but we've decided arbitrarily that it's worth $600,000 for taxation purposes. No taxpayer would live with that."

Undoing deductions doesn't require a change to the constitution, but it would likely require some votes from rural legislators, who are often very protective of the mining industry.