The heady revenue-generating prospects of $1,000/oz gold prices are not only attracting institutional investors, but advocates of higher mining tax revenues, both internationally and within the United States.

Mineweb: PLAN Executive Director Bob Fulkerson says the time has come for the hardrock mining industry to contribute more to the Silver State.

Dorothy Kosich

RENO, NV - 

The growing international chorus, which is demanding a bigger piece of the mining revenue pie in developing nations, such as Mongolia and the Democratic Republic of the Congo, may have spread to that bastion of the U.S. gold industry, the State of Nevada.

Bob Fulkerson, State Director of the Progressive Leadership Alliance (PLAN), told Mineweb Tuesday that he is floating several trial balloons-including revising hardrock mining tax deductions-in an effort to ease the State of Nevada current budget shortfall.

In a recent article for the PLAN newsletter, Fulkerson wrote: "The sales/gaming tax revenue that fuels the budget is cyclical and leads to dramatic swings, from $300 million in excess a few years ago to today's dramatic pitfall of more than $500 million. As a result of this, and our state's bootstraps mentality, we're looking more like a Third World country than the 16^th wealthiest state in the nation."

Ironically, proponents for tough reform of the nation's 1872 Mining Law have been arguing before the U.S. Congress that Nevada's hardrock mining taxation system produces less revenue for taxpayers than those tax regimes now being adopted in Third World countries.

Fulkerson is particularly concerned about Nevada's low-rankings in funding education, human resource programs, and environmental protection. In his article, Fulkerson says that the value of metals (gold, silver and copper) mined in Nevada from 2005 and 2006 increased 28.6% to $4.2 billion. Metal mining accounted for 85% of the value in all mining in Nevada in 2006, "which totals almost $5 billion."

"Despite an increase in the total amount of tax receipts, NV mining tax receipts are failing to keep up with the increase in the value of Nevada mining products. In 2006 tax receipts on metal mining represented only 1% of the value of mine metals, which was a 10.7% decrease from 2005. Why is mining in a protected class? Fulkerson asked.

PLAN has hired a Chicago-based economist to examine the deductions taken by companies with Nevada gold mining operations, to determine if they should be revised or eliminated. Those findings may find their way to the 2009 Nevada Legislature.

Nevada Gov. Jim Gibbons, whose press secretary did not respond to Mineweb's request for information as of deadline early Wednesday morning, is a former mining attorney and geologist. In an interview with the Review-Journal Capital Bureau, Gibbons said mining taxes won't be increased. "These companies invest billions in the state before they take one penny out. I don't want to do anything to jeopardize that investment in the state."

Fulkerson told the Review-Journal that he is aware that a mining tax increase has a constitutional requirement that tax proposals need two-thirds support in both the State Senate and the House. "But mining is the most clear cut example of corporations using Nevada as their bank account. They take public wealth out of Nevada and put it in their private bank accounts. We absolutely have to find revenue from somewhere or kids will be packed into classrooms like sardines."

Nevada Mining Association President Mark Amodei, who is also the state senator representing Nevada's Capital Senatorial District, told Mineweb Tuesday that $1,000 per ounce of gold prices are causing the general public to assume that miners are rolling in money.

However, he explained that mining costs are soaring, including the cost of exploring for new deposits to replace those which are already being mined in Nevada. Four years ago, Nevadans saw $750 million in new tax revenues, much of which was earmarked for education.

Amodei suggested that Nevadans should seek to broaden and diversify the state's tax base, rather than rely mainly on the gaming and mining industries for more tax revenue. He also indicated that the governor and a number of the state legislators are not likely to support an industry-specific tax.

Former Nevada Governor Bob Miller, now a member of Newmont Mining's board of directors, told the Review Journal that mining stepped up to the plate when he was governor and supported his business activity tax and other business taxes.

"The problem today is everyone is looking for a single industry-gaming, mining or whoever-to fix all out financial problems," Miller said. You can't put everything on the back of a single industry."

However, Review-Journal reporter Ed Vogel noted that "while gaming's gross revenue has endured three tax increases since 1989, mining's net proceeds tax rate has not been changed."

Nevertheless, from a purely political viewpoint, chances are rather slim that a former geologist and Homestake Mining landsman, who is now Nevada's Governor, would support a mining tax increase or the eliminate of deductions.

Amodei noted that most Nevada legislators are loath to support industry-specific taxes, or may not even wish to enact new taxes in the current economic environment.

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