Substantial tax deductions may be phased out for mining companies in Nevada. Lawmakers seem split down party lines on the issue with Democrats not believing that the mining industry is entitled to any special deductions and Republicans saying that the industry was vital to the rural economy in Nevada.
The Senate Joint Resolution 15 will be considered by legislators on Tuesday. It could start the ball rolling on a process that would remove the section of the constitution that limits taxes on minerals, oil, gas and hydrocarbons to 5% of the net proceeds. The whole multi step process would take about five to six years to complete.
The 5% tax cap which was passed by the state constitution in 1864 was meant to promote mining in the depressed state economy of the time. However people today feel that the provision has outlived its usefulness and want it ended. They claim that it is grossly preferential and unnecessary to give the mining industry tax breaks for marketing, vehicle maintenance and fire insurance.
Mining Association representatives said that they were willing to reconsider the deductions allowed in statute . Many of these were not present when the net proceeds tax was written into the constitution in 1864. Nevada Mining Association President Tim Crowley said due to high extraction costs a net proceeds tax was appropriate for the mining industry. He added that other taxes have been imposed by the legislators in recent years. The last ten years has seen the tax payments to the state from the mining industry quintuple.