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Severance tax issue a step closer to resolution

Where we stand

September 15, 2012
The Mining Journal

The Marquette County Board recently decided to hire the law firm of Miller Canfield to answer prominent questions related to development of a proposed severance tax on non-ferrous mining operations.

Two crucial issues the law firm is expected to try to resolve include the disputed valuation of the Eagle Mine set at $191 million in February and whether Proposal A caps affect the severance tax, which would be designed to replace the current ad valorem property tax.

The key underlying issue is what percentage of the severance tax local taxing authorities, including schools and local governments, should receive under the new severance tax to provide the same amount of revenue derived under the ad valorem tax structure.

The county board, Rio Tinto and state government officials disagree on what percentage of revenue would hold local taxing units, including schools and townships, harmless. County board Chairwoman Deborah Pellow said Rio Tinto officials think Proposal A caps will take effect under this year's $191 million valuation of the mine set by the state geologist, while county and state government officials disagree.

Until these crucial questions are resolved, agreement between the three entities is unlikely. State officials and lawmakers told the county board this week no severance tax legislation will be introduced until after the Nov. 6. general election, giving the parties involved more time to work out remaining differences.

The law firm's work is expected to start Oct. 1 and take about three weeks to complete.

We think the county spending up to $25,000 to hire the firm to try to resolve the outstanding issues is a good idea. The severance tax will likely affect non-ferrous mining taxation for generations to come and making sure the levy does not hurt local taxing units is of great importance.

We also support any efforts to move the discussions forward. The severance tax idea first surfaced last December and even with an agreement, the final provisions of the tax would be subject to the lawmaking process in the state legislature.

We hope for the best looking forward and hope this latest decision by the county board helps spur a resolution in the near future.



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