Mining tax increase considered

(AP) " An activist group is weighing a 2010 ballot question to amend the Nevada Constitution to increase the tax on mining operations.

In a letter to Progressive Leadership Alliance of Nevada board members, Bob Fulkerson, the group's state director, asked for thoughts on the ballot question because of "ominous signs" that legislators won't close mining tax loopholes in any significant way.

Mining lobbyists worked hard this session to block higher levies on their industry to help fill the state's gaping budget hole. Lawmakers must find $1.1 billion in revenues from various sources to balance a nearly $7 billion budget for the next two fiscal years.

Nevada Mining Association President Tim Crowley, who says single-industry taxation is bad policy, testified Thursday in favor of a bill to raise Nevada's modified business tax, which is a payroll tax.

In 2007 the state set a record with $5.4 billion in commodities extracted, according to the state Minerals Division. With the tax rate on mining capped at 5 percent, the state received $38 million and counties $37 million, according to Minerals Division records.

The tax on car rentals, by comparison, gave the state nearly $30 million in the past fiscal year.

Nevada is the largest gold producer in the United States, and trails only China, South Africa and Australia worldwide.

While most states tax mining based on gross value, Nevada's mining companies can deduct many expenses, including equipment depreciation, ore transport and minerals marketing. After the deductions, Nevada mining companies reported net proceeds of $1.5 billion in 2007, up from $853 million in 2005.

A ballot question, which would have to pass in two elections to become part of the Nevada Constitution, could wind up as an expensive war between the populist PLAN and a well-funded industry. It could also create thorny questions for candidates such as U.S. Sen. Harry Reid, the Democratic majority leader and longtime supporter of the industry, who would have to take a position.

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Information from: Las Vegas Sun, http://www.lasvegassun.com