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Mine tax bills OK'd by House

November 30, 2012
By JOHN PEPIN - Journal Staff Writer  , The Mining Journal

MARQUETTE - The non-ferrous mining severance tax bills package passed the state House of Representatives Thursday and has been referred to the Senate Committee on Economic Development.

The legislation, introduced by Rep. Matt Huuki, R-Atlantic Mine, would levy a 2.75 percent severance tax on gross mineral value on specific non-ferrous minerals, including the copper and nickel to be mined at the Rio Tinto Eagle Mine in Michigamme Township. The severance tax replaces property, corporate income, sales and use taxes currently paid by mining companies.

Under the latest version of Huuki's House Bill 6008, the tax revenue would be distributed with 65 percent going to the local taxing units and 35 percent to a newly-created rural development fund, which would finance infrastructure improvements and worker training.

"The tax reforms will help create good-paying jobs for local families, help invigorate our communities and encourage economic development," Huuki said. "The Upper Peninsula will start to take an active role in helping turn around Michigan's economy under these bills."

Meanwhile, the Marquette County Board expected to know by the end of today or Monday whether the 65-35 percent tax distribution proposal sufficiently compensates local taxing units for property tax revenue lost in the creation of the new severance tax.

Tuesday, the county board held a lengthy discussion on the provisions of Huuki's legislation, ongoing efforts to make changes and the panel's current stance on the issue. The most recent board vote indicated the panel wanted an 80-20 percent distribution split, with no transportation deductions allowed and keeping the Humboldt Mill under the current ad valorem tax structure.

In the House, the transportation deductions were removed from the legislation, increasing the amount of money available for the revenue distribution.

County officials remain in discussions with Rio Tinto on language delineating the amount of land surrounding the mine subject to the severance tax and a refund with interest of ad valorem taxes paid by the mining company this year, which is currently part of the legislation.

Rio Tinto Advisor for Communications and Media Relations Dan Blondeau said today the mining company believes "strongly that local communities/taxing authorities should benefit fairly, and first and foremost, from Eagle Mine production."

"This has been our position from the very start of discussions with Lansing and it remains our position today," Blondeau said. "Eagle Mine's goal is for a tax policy that is simple, fair, transparent and encourages continued investment and growth in the U.P. We feel this tax package achieves that goal."

Blondeau said Rio Tinto thinks the severance tax is "far more certain for all parties, as it is based on production and commodity prices."

Meanwhile, the county board voted unanimously Tuesday to allow Miller Canfield attorney Jack Van Coevering, who is working for the county, to discuss possible severance tax changes with state Sen. Tom Casperson, R-Escanaba, at county expense.

Van Coevering formerly served as chief judge of the Michigan Tax Tribunal and administrator of the Michigan Department of Treasury's legal and administrative hearings divisions. County Board Chairwoman Deborah Pellow said Van Coevering had proposed changes, not adopted so far in the House, which could have kept the Humboldt Mill under the ad valorem tax structure. The board wanted Casperson to be aware of the idea and the board's hopes for the final version of the legislation.

Pellow said the county would likely find out today whether additional committee hearings are expected in the Senate. If so, the county intends to send a delegation to testify, as it did recently before the House Committee on Tax Policy.

"You have to stay engaged at this time," Pellow said.

John Pepin can be reached at 906-228-2500, ext. 206. His email address is



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