Amendment would limit mining tax deductions

Senate Majority Leader Steven Horsford on Wednesday called for ending questionable tax deductions taken by the mining industry in a bill amendment that clarifies what's allowable, what's not and dangles a carrot for mining giants if they move their headquarters to Nevada.

"This is not an attempt to getting at revenue to balance this session's budget," Horsford, D-Las Vegas, told the Senate Committee on Revenue. "Too often, many of the proposals we deal with are all about getting to a number and not getting to a right tax policy."

But contradictions between state law and regulations "raises the fundamental issue on how to fairly tax the mining industry," he said.

"Lax interpretation of the law is giving the mining industry tax breaks it was not entitled to, and has cost this state I don't know how much in lost revenue," Horsford said.

SB493 would establish a seven-member commission to oversee all things mining - from taxes and environmental issues to worker safety and reclamation. The industry would still fall under various state agencies that have jurisdiction over those issues, but the commission would be the regulatory umbrella.

Horsford's amendment spells out that costs for such things as lobbying, employee housing, severance pay, trade association dues, mineral exploration, sales taxes and federal taxes would not be deductible.

The bill would allow deductions for costs associated with direct mining activities in Nevada, including employee travel within the state, reclamation and Nevada-based corporate services. That last inclusion, Horsford said, would entice mining companies located elsewhere to move corporate operations to Nevada, which leads the nation in gold production and is sixth in the world behind China, South Africa, Australia, Russia and Peru, according to the Nevada Division of Minerals.

Tim Crowley, president of the Nevada Mining Association, said his organization was neutral on the bill, but would like further discussions on the commission's makeup and some of the deductions that would no longer be allowable, like sales taxes on heavy equipment purchased by companies for mining operations.

"We have followed the rules as we've been asked to follow the rules," Crowley said. "We've paid our taxes in an appropriate way. We believe the deductions we've taken have been with the guidelines."