Tuesday, March 19, 2013

Mining for Reality

I know we keep talking about this. But hey, we're talking about it because this is important. And we're talking about it now because we need to cut through the spin and find some reality.

So let's briefly talk about what went down on KNPR just moments ago. Of course, Senate Minority Leader Michael Roberson (R-Metamorphosis?) jousted with Nevada Mining Association President Tim Crowley on SJR 15 and Roberson's controversial IP 1 mining tax alternative. Crowley kept trying to deny reality, while Roberson was tooting his own horn as he was ripping into Crowley's attacks on his mining tax proposal.

Today's "State of Nevada" was fiery... But what if it was ultimately just Sturm und Drang? As we discussed last Thursday, there's a strong possibility that the clock has simply run out on Roberson's IP 1 alternative because the Legislature did not actually vote on IP 1. As Nevada's hottest new legal blogger Sean McDonald/Amicus Nevada explained, legislators must actually reject a people's initiative in an actual floor vote before they can propose an alternative initiative. While the Legislative Counsel Bureau (LCB) and Steve Sebelius disagree, it's increasingly looking like the consensus view is that Roberson is standing on the legal equivalent of quicksand with his IP 1 alternative.

So where does that leave the debate on mining taxation? Actually, that brings us back to SJR 15. It already passed #NVLeg once. And there's no legal fight surrounding it. Yes, all SJR 15 does is remove the mining industry's tax rate (and exemptions) from the Nevada Constitution. Yet that alone can make a world of difference.

Tim Crowley claims SJR 15 will do away with any mining tax. That's only possible if the mining industry goes to court and wins a law suit. Is that what the mining industry wants to do?

What's more likely is that multinational mining corporations will be forced to pay something closer to their fair share because their tax rate & exemptions are no longer written into the Nevada Constitution. That's why the mining industry is fighting SJR 15 tooth and nail.

The real reason the current mining tax structure was instituted in 1989 was because the mining industry refused to pay a severance tax. Imagine if #NVLeg was considering a gold severance tax similar to the oil severance tax proposals being considered in California and Ohio. But alas, that's not happening. Instead, certain legislators are discussing placing an increase in the net proceeds tax onto next year's ballot to compete against The Education Initiative. And at this point, it will likely soon prove to be fool's gold (as it may no longer be legally feasible).

But you know what's still here? SJR 15. It's just waiting for a second round of approval so it can go to voters in 2014. It won't compete against The Education Initiative, so no worries there. And if passed by voters next year, SJR 15 will finally give legislators the flexibility they need to properly set mining taxes. If Michael Roberson still feels strongly about raising the net proceeds tax, he can introduce one then.

Remember that former State Senators Sheila Leslie (D-Reno) & Steven Horsford (D-North Las Vegas) introduced SJR 15 back in 2011. It wasn't until this month that Michael Roberson suddenly embraced mining tax reform as "his cause". And the mining industry has enjoyed the current lax system of nearly no taxation since 1989. Keep all of this in mind as we keep digging past the kabuki theater to uncover reality.

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