Mining tax cap repeal clears panel in Assembly

An Assembly panel Thursday approved a measure to repeal the constitutional tax cap on net proceeds paid by mining companies, a move long advocated by mining foes who claim the industry hasn’t paid its fair share of taxes while reaping huge profits from Nevada’s nonrenewable resource.

The 7-5 vote by the Assembly Taxation Committee was along party lines with Republicans opposed. Senate Joint Resolution 15 now goes to the full Assembly, where passage is likely. The measure, which also was approved by the 2011 Legislature, would then go to voters in 2014 for ratification.

“I think that SJR15 is an evolution in our tax structure and it’s a first step in that direction,” Assemblywoman Irene Bustamante Adams, D-Las Vegas, said after the meeting. Bustamante Adams is chairwoman of the committee.

The resolution repeals a 5 percent cap on mining net proceeds that has been in the state Constitution since the late 1980s.

Backers of the measure say the industry has skated on paying taxes in a state that saw its economy take a beating in the recession.

But industry representatives counter that mining also pays other taxes like sales and payroll taxes that other businesses pay. They argue that removing the industry’s net proceeds cap would actually lower its tax burden.

James Wadhams, a mining lobbyist, reiterated that stance after Thursday’s committee vote, saying SRJ15, if ultimately enacted, would amount to “significant” revenues losses to state and local governments.

“The people voted the tax increase in 1989. They may well reverse that in 2014,” Wadhams told reporters.

Legislative lawyers, however, have stated otherwise. In earlier hearings, staff attorneys said if the constitutional section is repealed, the net proceeds liability remains in statute. Removing it from the constitution would give lawmakers flexibility to change the tax rate.

Mining has always been a target when lawmakers go looking for more money to fund state government. Nevada is the largest gold producer in the United States.

When gold hit record highs in recent years, that allure intensified.

Republicans from rural mining regions have staunchly defended the industry, but this session mining came up against some new foes — six Republican urban senators led by Majority Leader Michael Roberson, R-Henderson.

Roberson has introduced a bill seeking to double the net proceeds taxes paid by Nevada’s gold and silver mine operators. His measure, which has not been acted upon, would compete with a 2014 ballot question to impose a 2 percent margins tax on businesses that gross more than $1 million a year.

If it makes it to the ballot, it would be contingent upon voters repealing the mining tax cap in the state constitution.