WTF?: Mining tax laws too complicated for state to audit?

Uh, we’re sitting here tonight working on our taxes, and our response to this was “WTF?” Apparently, mining has been getting away with murder when it comes to the net proceeds taxes on minerals - because nobody down at the Nevada Taxation Department has the skill set to understand the arcane laws and do an audit.

But that’s what Terry Rubald, chief of the Taxation Department’s assessment division told the Nevada Senate Revenue Committee. Oh, and they don’t believe the mining industry is shorting the state of tax revenue. Right!

In a textbook case of having a taxation system for mining so incredibly complex that it boggles the imagination - and defies even the state’s own experts - state Taxation Director Dino DiCianno said that he hasn’t had any auditors for the last two years who were qualified to look into Nevada’s maze-like tax law on net proceeds of minerals. Oh, and he forgot to inform the new governor that he had this problem - as the state starts going under for the third time with a $2 billion+ budget deficit.

“I am going to have to start taking blood pressure medicine,” responded Senate Majority Leader Steven Horsford, D-Las Vegas. “We have a huge increase in net proceeds (taxes) and you don’t have anyone with the skills set to look at these companies at a time we have an enormous challenge with our shortfall.”

Who’s running the shop down there in Carson City? Nevada has a 100+ years dealing with mining and we don’t have anybody who can understand the regulations? WTF?

But apparently, Governor Brian Sandoval isn’t worried, having reported that the mining tax collections will be $10 million more than previous projections. I seem to remember that the mining industry forked over a nice bit of hush-money when last threatened by serious people - making an advance payment of $85 million towards the net proceeds of minerals taxes. Of course this was a ‘guestimate’ which mining pulled out of it’s own ass - after taking the price of gold and deducting everything plus the kitchen sink. Even better, Sandoval volunteered the money - without benefit of the pesky legislative process - to education.

Sweet. Senate Revenue Committee Chairwoman Sheila Leslie, D-Reno wasn’t amused, calling it ‘ridulous’ that he could single-handedly decide where funds go. I’d be calling it something else. But I’m a blogger.

Earlier today, I was guffawing over the Las Vegas Gleaner’s excellent posts on just how the Nevada mining industry needs us way more than we need them:

“Lest there be some confusion, let’s clarify: Nowhere on earth is more important to Barrick and Newmont than Nevada. And that isn’t going to change any time soon, given the scale and quality of Nevada’s gold reserves (as noted in the previous post).

Yet official Nevada behaves as if the corporations are here out of the goodness of their hearts (which corporations don’t have, by the way; not human), as if Nevada depends on Newmont and Barrick for its financial health, when in fact Newmont and Barrick depend on Nevada for theirs. Barrick and Newmont are playing Nevada for chumps. Like perhaps most Nevada politicians, Sandoval either hasn’t noticed, or doesn’t mind.”

This is why we blog. So we can just say what’s on our minds.

But back to the part about the Taxation Department not having enough smart people there to figure out how much the mining industry should be paying …

This cuts right back to the old Grover Norquist/GOP strategy of ‘starve the beast’. Defund or underfund agencies, who will then cut back on staff, and then the job doesn’t get done … and then those who hate government - because we all know government is the problem - can point and say “Lookee, over thar! Another government agency that should be done away with!”

Self-fulfilling prophecy.

So here we all sit, with an enormous state budget shortfall - the fault of high-binders on Wall Street who’ve walked off scott free - and as it turns out mining is paying less in net proceeds taxes than the amount of taxes paid to the state by rental car companies.

Shucks. I sorta kinda think there needs to be an AUDIT of mining’s taxes, despite what the industry’s toadie, Tim Crowley says. I’m mean, if all is hunky-dory, then mining shouldn’t be bothered by an AUDIT, right? It’s all about ‘accountability’ isn’t it? Don’t we all need to be held accountable? Isn’t that the GOP mantra? Or is that just bullshit for the little pip-squeak taxpayers?

According to the Las Vegas Gleaner, mining paid a measly $123 million in taxes to Nevada in 2010 - of which only part goes to the state’s general fund. But the mining companies - Barrick and Newmont - themselves are sitting on $4 billion in cash … each.

Here’s my suggestion.

Let’s get past this unhappy AUDIT thing. We obviously can’t afford it. We can’t change the Nevada Constitution quickly enough to help right now. Let mining off easy - let’s just get rid of all the silly deductions that nobody at the Taxation Department can keep track of. It’s 5% right off the top. No deductions for diddly

That sounds fair when they’re sitting on one of the biggest concentrations of obtainable gold in the world, and have been making record profits.

I think that’s a grand plan.

-maven

Comments

[anonymous]

Had lunch with three friends today and three out of four of us are geologists. We all agree that mining is not paying the fair share of taxes on the NON-RENEWABLE resources they're extracting from Nevada. When the gold is gone, so will they be. Something needs to be done about this, really.