Bi-Partisan Group of Senators Call for Taxpayer Protections in New Mining Law
To: POLITICAL EDITORS
Contact: Steve Ellis of Taxpayers for Common Sense, +1-202-546- 8500 x126
WASHINGTON, April 23 /PRNewswire-USNewswire/ –Today Senators Feingold (D-WI), Sununu (R-NH), Cantwell (D-WA), and Gregg (R-NH) led a bi-partisan push for the inclusion of important taxpayer protections in the reform of the 1872 Mining Law.
In a letter sent to the Energy and Natural Resources committee, the Senators pointed out that [f]or 136 years … valuable minerals mined on federal lands have been given to private interests for free, and emphasized the need for a fair royalty, a fund to address abandoned mine clean-up and the need to repeal the percentage depletion allowance. Senators Cardin (D-MD), Reed (DRI), Snowe (R- ME), Whitehouse (D-RI), Sanders (I-VT) and Menendez (D-NJ) joined them in their call for these important reforms.
These Senators should be commended for leadership on behalf of taxpayers, it is time to bring the 1872 mining law into the 21st century, said Ms. Ryan Alexander, President of Taxpayers for Common Sense. For too long taxpayers have gotten nothing for these valuable minerals, except the tab for costly clean-up of abandoned mine sites.
The Mining Law of 1872, which still regulates many of our precious minerals, has remained unchanged for 135 years. The law allows gold and uranium and other precious metals to be extracted from federal lands without the payment of royalties to the federal government.
In the letter the Senators point out, other extractive industries- -oil, gas, coal–pay a royalty when operating on public lands. We believe that a properly structured royalty is fiscally and environmentally responsible. Oil, gas, and coal pay royalties as high as 12.5 percent to extract resources from federal lands, while the mining industry owes no royalties.
Several mining conglomerates who operate on federal lands have reported billions in profits. Gold prices are at record highs and copper, silver, and other precious metal prices are rising. Australias Rio Tinto Ltd., reported a 2006 profit of $7.9 billion worldwide. And Canadas Barrick Gold Corporation reported 2006 net earnings of more than $1.5 billion worldwide.
In the letter, the Senators called for a strong royalty for both existing and new mining operations in order to provide parity among extractive industries and also ensure a fair return for the use of taxpayer-owned public lands. The Senators also called for repealing certain tax preferences for mining and using this revenue along with royalties to help meet the expense of the clean-up costs associated with abandoned mining operations. The damages left behind have been estimated to cost between $50 and $72 billion.
Taxpayers should not be forced to line the pockets of the mining industry, concluded Alexander. It is time these companies be held accountable for the profits they gain from our taxpayer-owned resources.
Letter sent by Senators attached.
The Honorable Jeff Bingaman
Chairman
Senate Committee on Energy and Natural
Resources
304 Dirksen Senate Building
Washington, DC 20515
The Honorable Pete Domenici
Ranking Member
Senate Committee on Energy and Natural
Resources
304 Dirksen Senate Building
Washington, DC 20515
Dear Chairman Bingaman and Ranking Member Domenici:
As the Senate Energy and Natural Resource Committee works to reform the 1872 Mining Act, we wish to voice our support for a royalty that is fair and equitable and makes good fiscal sense.
For 136 years, under the 1872 law, valuable minerals mined on federal lands have been given to private interests for free. By comparison, other extractive industries-oil, gas, coal-pay a royalty when operating on public lands. We believe that a properly structured royalty is fiscally and environmentally responsible. Therefore, the Senate should adopt a royalty structure based on gross income or net smelter return. A royalty of this nature limits opportunities for abuse and ensures that the royalty can automatically adjust to changes in the market and not over- or undercharge. Furthermore, according to the Mineral Business Appraisal, “[net smelter] royalty payments are also fairly simple to calculate and administer in that only the selling price and quantity of mineral product produced or sold are required for their determination.”
Secondly, we urge the Senate to adopt a strong royalty for both existing and new mining operations in order to provide parity among the extractive industries and also ensure a fair return for the use of taxpayer-owned public lands. Mining companies not only mine for free on public lands (which is not the case for mining on state or tribal owned lands), but they also benefit from preferential tax treatment that other industries do not receive. Mining companies are allowed to expense certain costs for exploration and development, as well as deduct the costs of closing a mine and the associated reclamation costs before a mine is actually closed.
Additionally, mining companies receive a Percentage Depletion Allowance, which is a fixed percentage deduction against gross income, despite the fact that they have not paid for the mineral in the first place. Because of the way the depletion allowance is applied, mining companies may actually receive more in deduction credits than their investment in the mine. And the combination of tax preferences and other more standard deductions available to them means that mining companies often pay an effective tax rate much lower than the statutory corporate rate of 30 percent.
By imposing royalties and repealing the Percentage Depletion Allowance for mining on public lands, additional funding will be available to address the approximately 500,000 abandoned mines across the United States without shifting this significant burden to taxpayers.
We urge the committee to include these necessary elements of reform in its efforts to bring the antiquated mining law into the 21st century. We look forward to working with your offices to this end.
Sincerely,
Russell D. Feingold
John E. Sununu
Maria Cantwell
Judd Gregg
Jack Reed
Sheldon Whitehouse
Robert Menendez
Olympia J. Snowe
Benjamin L. Cardin
Bernard Sanders
SOURCE Taxpayers for Common Sense
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