SHEESH.....we are being eaten alive...
I wonder if there will be a nation to hold together after four more years of this guy.
This is something the environmentalists put up every single year.
The gross tax is fundamentally unfair and will directly lead to a decrease in production. The gross tax makes blocks of ore unprofitable to mine leading to a decrease in our overall resource production. Once a mine plan is made it can be very difficult to incorporate low grade blocks at some date in the future. Of course, there already is a net tax in the form of corporate income tax on mining companies.
The tax is pursued by environmentalists and there is a Pew foundation dedicated to raising taxes on hard rock miners. Mining companies already pay tax to the federal government. They have to buy reclamation bonds, endure endless permitting issues and challenges which decrease the NPV of any project, jump through hoops to satisfy regulators once mining has begun (particularly of the federal variety), and then remediate the mine site to a standard that leaves it better than when they started mining. All of these are costs that the federal and state governments impose on mining companies before talking about any kind of profit.
The sad part is that something like this will probably pass if the gold price remains high for the next few years. The Nevada gold miners already agreed to extra taxes and are under pressure for more.
Also, besides decreasing production, this will lead to a decrease in very well paying jobs. Professionals in the mining sector do very well and hard rock mining employees a large number of Americans, directly and indirectly.
This tax could also make a project uneconomic from the start which is what the environmentalists are really after. Mining profits are generally relatively low and are based on high volume, low margins. The introduction of this tax after a mine has begun operation will lead to sub optimal production rates. Due to the huge regulatory issues and the ease with which environmentalist lawsuit factories, some of which receive grants from the government, many mining projects are never permitted. If they are, millions have been spent in the permitting stage and possibly billions more over several years for development costs before any kind of return is achieved. This delay decreases the net present value of the project and can make certain mines, particularly low volume, low margin mines, artificially economically unattractive.
This is why the US mining giants have expanded overseas to Africa, PNG, Indonesia, etc.
Since when does a budget override a law?