It goes without saying that Nevada’s mining industry has always been proud of the unique role it has played in the founding and the development of the state of Nevada. Mining is not only Nevada’s original industry, but was once its largest. Over the last 100 years, mining’s role has changed as other industries have emerged; today representing just under 2 percent of Nevada’s GDP, behind 11 other industries. Yet despite its size, mining has found itself villainized and unfairly targeted for tax increases by some who do not understand it.
As it was in the recently concluded 31st Special Session, mining was a central focus of the 32nd Special Session of the Nevada Legislature, which kicked off on August 1. Three constitutional resolutions seeking to drastically change the manner in which mining is taxed were introduced and passed, leaving much work to do leading up to and during the 2021 Legislative Session in order to protect the mining industry.
Assembly Joint Resolution 1 and Senate Joint Resolution 1 are functional equivalents, except for the distribution of the funds, in that they both: 1) delete the 5 percent capped tax rate on net proceeds and replaces it with a minimum rate of 7.75 percent on gross; 2) locks the language into the Constitution; 3) changes the mechanism for adjusting the rate; and 4) takes money away from local county governments.
The immediate impact of these changes would result in a 382 percent tax increase. This action would be unprecedented, not just in Nevada, but anywhere in the United States. Simply put, Assembly Joint Resolution 1 and Senate Joint Resolution 1 would fundamentally change mining in Nevada. Thus, the Nevada Mining Association vehemently opposes both pieces of legislation.
Assembly Joint Resolution 2 was an “olive branch” extended by Speaker Jason Frierson, reaching out to the NVMA to find a way to maintain the current net proceeds calculation and keep the county governments whole. Under Assembly Joint Resolution 2, the constitutional cap would increase from 5 percent to 12 percent. Preliminary discussions have been fruitful for carving out the increase as applied to smaller mining operations and creating a tiered tax structure. AJR2 is by no means perfect, and would require a lot of work to gain the NVMA’s support. However, the NVMA remained neutral on the bill as a gesture of goodwill to encourage negotiations in the interim.
Tax measures that harm the long-term viability of mining hurt much more than just the bottom line. They hurt our families, our communities, and our entire state. Over the next several months, Nevada miners will have to come together in unprecedented ways to educate our decision-makers on our true value to the state. We will have to be vocal at fighting misinformation and inaccuracies. In the end, we know that just as mining was critical to our state’s beginnings, it will and must be critical to Nevada’s recovery and future.
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