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Web posted
Tuesday, January 29, 2008
Mining tax increase before legislators Wednesday
By Alaska Legislative Digest
House Bill 156, a bill to revise Alaska mining tax law as well as increase taxes, is up for an initial hearing in the House Ways and Means Committee for Wednesday, Jan. 30. Current mining tax rates are based on a graduated scale that increases with net income, currently topping out at 7 percent. Mining operations are now exempt from paying the mining license tax for the first 3 ½ years of production. House Bill 156 changes this to a deferral payable over 10 years. Rates are increased by 2 percent per income bracket with an additional marginal tax bracket for net income over $1 million to be taxed at 11 percent.
The bill also changes the calculation of the royalty for mineral mining on state land from a current 3 percent of net income to a 3 percent net smelter return (NSR) tax. The royalty represents a share of mineral wealth that is paid to the owner of the mineral rights. Private landowners in Alaska, mostly Alaska Native corporations, negotiate for a NSR royalty between 2 percent and 5 percent.
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