- Associated Press - Friday, October 10, 2014

LAS VEGAS (AP) - Proponents of a ballot measure that would remove a mining-tax cap from the Nevada constitution said the industry has a sweetheart deal that keeps it from paying its fair share, while opponents said the measure is the first step toward raising taxes and discouraging mining companies from doing business in the state.

The remarks came during a debate on Question 2 that was scheduled to air at 7 p.m. Thursday on Vegas PBS. Passing the measure would repeal a 150-year-old constitutional provision that applies a 5 percent cap to taxes on the net proceeds of minerals and would allow the Legislature to set another rate if it chooses.

“It does not do anything in terms of raising taxes or lowering taxes,” said proponent Bob Fulkerson, state director of the Progressive Leadership Alliance of Nevada. “It will not cost jobs. All it will do is simply give the Legislature one more lever to pull when they’re looking at how to shore up our state’s very dysfunctional tax system.”

Question 2 opponents note that mines pay the same taxes that many other businesses do, plus the mining industry-specific net proceeds of minerals tax. They argue that potential tax increases could discourage companies from new exploration projects and might kill off mining industry jobs, which pay an average of $88,000 a year.

“In order to survive, they’ve got to balance the costs with the revenue they can get. So the cost of extracting the minerals, you add to that the cost of taxation,” said attorney James Wadhams, who has worked as a lobbyist and argued against the measure. “There will be jobs that will disappear. No question.”

Nevada produced more than $9 billion in gold in 2012, while the net proceeds of minerals tax brought in $236 million in fiscal year 2012-2013, according to state data. Critics argue that the state should be getting more from the industry, which is dominated by two large companies - Barrick Gold and Newmont Mining.

“Ask yourself: Can giant, highly profitable mining corporations afford to contribute more to our state?” Fulkerson said.

Moderators also brought up a proposal from the 2013 legislative session that called for raising the net proceeds of minerals tax and earmarking the money for education. The industry opposed the measure, which ultimately failed.

Wadhams said the mining industry wants to support education and services in Nevada, but argued it would be irresponsible for the state to rely heavily on a tax of something such as gold, which swings dramatically in price.

“They believe it should be broad-based,” Wadhams said. “Industry-specific taxation creates a problem. It creates a volatility.”

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