U.S. REPORT New tax laws in 27 states a mixed bag, survey finds

A survey of 1990 mining tax legislation showed no clear winners in 27 states, reports Mining Cost Service, a publication of Western Mine Engineering of Spokane, Wash. An assortment of laws were passed, some favorable and some unfavorable to the industry, says the company in outlining some of the highlights.

After years of dispute over copper property valuation procedures, the New Mexico legislature defined the taxable value of an operating copper property as a percentage of the value of copper produced the previous year, ranging from 20% to 135% depending on the type of production.

Arizona lowered its top income tax rate to 9.3% from 10.5%, but eliminated some deductions previously available to mining companies.

They also raised the property tax assessment ratio for operating mines to 30% from 25%.

Also in Arizona, the department of revenue took an unusual step in anticipation of a proposed, but as yet uncertain, increase in the metalliferous severance tax rate. Each year the department conducts a study to determine the appropriate discount rate to use in valuing property by the income method of appraisal.

This year’s study indicated that a rate of 15% would be appropriate for metal mines; however, because of the risk of an increase in the severance tax rate, the department added a 2% risk factor resulting in a 17% discount rate.

Utah increased its Mining Severance Tax rate and also increased the percentage of gross proceeds subject to taxation for copper and beryllium production. In the past, these metals were subject to lower taxable percentages than other metals. The Utah State Tax Commission is working to upgrade its procedures for valuing mineral properties.

In the meantime, the Utah commission, the mineral-producing counties and the mining industry are awaiting the results of a court case, Kennecott versus Salt Lake Cty., that could have a significant impact on how minerals in place are valued for property tax purposes.

Minnesota, continuing a lengthy tradition of tax “reform,” made substantial changes to its “occupation taxes” (income taxes) on taconite, semi-taconite, iron ore and non-ferrous minerals. The state created a new system of class rates for property taxes, it exempted mining equipment from sales and use taxes, and it eliminated the royalty tax.

The Alaska legislature initiated a study of taxation of mineral resources in place to determine what, if any, legislation may be in order. To gain the time needed to properly study this complex issue, the legislature exempted mineral resources in place from municipal property taxation until July 1, 1992.

California increased several of its hazardous waste fees, but exempted certain mining wastes from some of the fees. Colorado extended a temporary coal severance tax exemption that was due to expire this year. Kentucky, New Mexico and South Carolina raised their sales tax rates, while Missouri and North Dakota lowered theirs.