A lawsuit filed by the Nevada Mining Association argues a proposed constitutional amendment to raise the cap on net proceeds taxes paid on minerals is misleading, fails to inform voters of potential consequences and sets up a "constitutional collision" with other property tax protections.
The suit, filed late Wednesday in state court in Carson City, seeks to block the initiative backed by conservative Las Vegas businessman Monte Miller from the ballot.
"Monte Miller's proposed mining tax initiative goes far beyond what meets the eye, and Nevadans have a right to know the full impact of what they're being asked to sign," Nevada Mining Association President Tim Crowley said Thursday.
"The impact this proposed initiative will have on Nevada's overall tax structure and its citizens is not even addressed by Mr. Miller," Crowley said. "Our legal filing requests that important aspects of this initiative be provided to voters in the required statement of effect."
Miller's initiative group, called Nevadans United for Fair Mining Taxes, wants to raise the tax cap to 9 percent of net proceeds, up from the current 5 percent. Mining companies pay a net proceeds tax on minerals, an amount that is calculated after extraction and other businesses costs are deduced.
Maggie McLetchie, a lawyer for the group, said the measure changes one number - 9 instead of 5 - in the constitution.
"It is extremely simple," she said. "Given how simple it is, I think it's hard to make the case that this will be confusing to voters."
The initiative doesn't require the mining tax to be raised, but it increases the maximum percentage and would allow the Legislature to increase the rate that for decades has been limited by protections in the state constitution.
But mining association lawyers argue that raising the net proceeds rate would violate another provision in the state constitution that mandates uniform and equal taxation of property, and would conflict with a section that says property taxes cannot exceed 5 percent.
"If proponents wish to engineer this constitutional collision, and to effectively repeal other constitutional protections for Nevada taxpayers, they should say so," the lawsuit said.
Besides net proceeds taxes, the industry also pays sales, payroll and other taxes also assessed to other businesses.
Backers of the initiative need to gather more than 72,000 signatures to qualify for the ballot. Voters would have to approve it in November and again in 2014 for it to take effect.
The mining industry is a frequent target for new revenue when Nevada's economy tanks, and such was the case during last year's session as gold prices soared. The industry agreed to give up some tax deductions and a new oversight panel was created.
Miller, who sits on the board of the conservative, pro-business group Keystone Corp., is pushing another initiative to raise the top tier of gambling taxes paid by Nevada's largest casinos to 9 percent, up from 6.75 percent.
He argues his motive is fairness, and that "fairly" taxing the billions of dollars big casinos win from high-rollers would ease the tax burden on small businesses and individuals.
Virginia Valentine, head of the Nevada Resort Association, called that proposal "reckless and irresponsible," and said it would amount to a 33 percent tax increase.
