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Rural Nevada Counties, Mining Industry Fret Proposed Changes To Mining Taxation

Round Mountain mine in Nye County, Nevada.
Uncle Kick-Kick, licensed under CC BY-SA 2.0
Kinross Gold operates the Round Mountain mine in Nye County, Nevada.

Any one of three joint resolutions passed during the recent special session of the Nevada Legislature could ultimately change the way and rate at which mines are taxed in Nevada, and rural counties and mining companies are worried. As a warning, this story contains language that some readers may find offensive.

The way mines are taxed in Nevada is enshrined in the State Constitution, and the Constitution is not easily revised. Any one of a trio of joint resolutions would need to pass another session of the Legislature and then pass a statewide vote in order to change the long-standing regulations. This process will take years to unfold.

Should either Assembly Joint Resolution 1 or Senate Joint Resolution 1 become law, they would eliminate the net proceeds of the minerals deductions that mines can take for operating expenses before paying a 5 percent tax. They would also end the distribution of mining tax revenue to the counties where mines are located. Roughly half of net proceed taxes currently go to counties.

Instead, the State would collect a tax of 7.75 percent on all gross proceeds. Ken Tipton, chair of the Humboldt County Board of Commissioners, said the two measures would devastate the Humboldt County government and economy.

“I think it’s horrible,” Tipton said by phone. “I think it’s a rape of the rural counties by the metropolitan areas, specifically Las Vegas, Clark County. For Humboldt County, the net proceeds is a little over 20 percent of our total revenues received.”

The Nevada Mining Association, mining companies, and their lobbyists all opposed these proposals. Barrick and Nevada Gold Mines broke rank, however, and testified in the neutral position on Assembly Joint Resolution 2. It’s a measure that would retain the net proceeds of the current minerals tax structure, but it would raise the tax to somewhere between 5 and 12 percent. The tax is currently capped at 5 percent.

Christina Erling is director of government affairs North America for Barrick.

“Yes, it does represent a 140 percent increase in the taxation on the industry, but we have recognized for a long time that mining needs to contribute more, at least in the Nevada Gold Mines perspective, that mining needs to contribute more, but in a way that protects the industry’s ability to operate throughout the cycle,” Erling said.

The effort to raise mining taxes in Nevada is old. State lawmakers desperate for additional sources of revenue in the wake of COVID-19 are now looking to the gold industry, which continues to operate during the pandemic. Gold is selling for roughly $1,800 an ounce.

KUNR Contributor Brian Bahouth is the founder and editor-in-chief of The Sierra Nevada Ally. To read more on this topic, visit The Sierra Nevada Ally.

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