Making adjustments to mining-related taxes isn’t as easy as one might think. You see, mining taxation is provided for in the Nevada Constitution. That’s not an ideal way to provide for taxation. Consecrating such an item in the constitution quells any changes even though they might be deemed necessary. That same provision also prohibits assessment of any other taxes on minerals.
The mining industry pays a 5% “property” tax on mineral resources. To most folks, 5% might seem reasonable, but like you have certain “deductions” you can take on your federal tax returns, the mining industry, similarly has deductions they’re allowed to take relative to extraction and processing costs. Those deductions significantly reduce the revenue the state receives, and it’s nowhere close to 5%.
Though not an instantaneous process, Democrats have begun efforts to remove the mining tax provisions from the Nevada State Constitution. To remove that provision, the Legislature would have to pass it twice before it could ultimately go to the voters for ratification.
From Ballotpedia:
“The Nevada Constitution can be amended via three different paths: a constitutional convention, a legislatively-referred constitutional amendment or an initiated constitutional amendment.
Section 1 of Article 16 governs how the Nevada State Legislature can propose an amendment to the constitution.
- An amendment can be proposed in either chamber of the state legislature.
- A majority of the members of both chambers must approve the proposed amendment.
- After the next general election for members of the state legislature, the proposed amendment must be considered again, and again approved by a majority of the members of both chambers.
- The state legislature can call a special election for the proposed amendment(s) if they wish.
- The amendment is then put to a vote of the people. If “a majority of the electors qualified to vote for members of the Legislature voting thereon” vote in favor of it, the measure becomes part of the constitution unless it is precluded by Section 2 of Article 19.
- If two amendments are proposed at the same election that contradict each other, the one that gets the most votes becomes part of the constitution.
Section 2 of Article 16 governs constitutional conventions.
- If two-thirds of the Nevada State Legislature votes in favor, a question about whether to hold a constitutional convention goes on a statewide ballot. That election must be held at the same time as an election is being held for members of the state legislature (that is, a constitutional convention question can’t go on a special election ballot).
- A majority vote — but not a simple majority vote — of the statewide electorate is required to generate a convention: “In determining what is a majority of the electors voting at such election, reference shall be had to the highest number of votes cast at such election for the candidates for any office or on any question.”
Sections 2 and 3 of Article 19 govern initiated constitutional amendments.
- Signatures equalling 10% of the number of voters who voted at the last preceding general election must be collected to qualify an amendment for the ballot, and these signatures are subject to a distribution requirement
- If an initiated constitutional amendment wins in one election, it must win again at the next general election in an even-numbered year for it to become part of the constitution.
- Nevada is the only state that requires that a citizen-initiated amendment be voted on twice. The same requirement does not apply to legislatively-referred constitutional amendments in the state.”
To start the Constitutional Amendment process from the Legislature, Senate Joint Resolution 15 (SJR15) has been introduced by the Senate Revenue Committee. It seeks to remove the preferential constitutional tax protection the mining industry currently enjoys. Keep in mind that if this measure should pass in this Legislature, we will have to wait until the next legislature convenes (that would be after the next election), before it can once again be presented for a vote in the Legislature. It would have to pass again before it could be placed on a ballot for voters to ratify. That’s not going to happen overnight, and it’s going to take about 5 years to come to fruition. So if you were hoping for a reprieve in our current budget crisis by increasing taxes the mining industry pays, I suggest you rethink that premise.
Doing just that, Assemblywoman Peggy Pierce (D-LV) introduced a bill (AB428) that would reconfigure allowable deductions the mining industry can use to mitigate their tax liabilities. In the short term, this measure may be able to increase mining tax revenue owed to the state.
Another measure focusing on the mining industry was also introduced by the Revenue Committee. Under SB493, a Mining Oversight and Accountability Commission would be created with 3 members appointed by the Governor and 4 members appointed by the Majority Leader of the Senate (2) and the Speaker of the Assembly (2). That 7-member commission would then be responsible for writing tax regulations (something that has been the purview of the Nevada Tax Commission) and for overseeing environmental and safety regulations.
Personally, I was hoping for more. I was hoping for less “chiefs” and more “indians” as the old cliche goes. We need more inspections to see exactly “what” is being extracted and a true accounting of the actual amounts of rare earths and minerals being extracted. We’ve all seen how well self-regulation worked in the banking and securities sector. We haven’t a clue how well it’s not working in the mining industry. This is our state and these are our riches. Are we being plundered? We’ll never know if we never effectively inspect what is being mined and removed without reporting.
You can easily share your opinions on these and other bills being considered by the legislature by going to the NV Legislature’s “Share Your Opinion with the Legislature” page. I did, will you?
Related Posts:
- LV Sun: Democrats seek to repeal mining tax from the constitution
- NV State Employees Focus: Finally—Mining Tax Changes Proposed!
Rural Nevada Democratic Caucus 