State proposes new mining tax

Posted: May 19, 2012 at 5:16 pm

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MARQUETTE - Michigan Department of Agriculture Director Keith Creagh met with local officials in Marquette County Friday, providing the basic outline for the agency's proposals to create a rural development fund and a non-ferrous mining severance tax, which would be expected to protect revenue streams for local taxing entities.

"We're trying to put some preliminary information out there," Creagh said.

The basic premise of the department's proposal is instead of having four different tax for non-ferrous mining (real property, personal property, corporate income, and sales and use), a single severance tax (set percentage charge of gross ore sales revenue) would be developed.

The tax would not apply to related milling or other operations unless they are contiguous to the above-ground mining operations. A rural development fund that will support long-term regional economic opportunities would be created.

Creagh said the tax will be designed to deliver the same or more revenue to local governments as the current system. A mechanism will be established that will allow for local collection of the tax.

According to Creagh, the severance tax will be collected by the locals with 45 percent of the revenue maintained by the impacted counties, townships, school districts, intermediate school district and school aid fund.

The distribution of funding will follow the current property tax distribution and offset revenue that would have been provided to the locals under the current property tax distribution model. The remaining 55 percent of the severance tax will go into a rural development fund to support long-term regional economic opportunities.

A bipartisan rural development fund board would be chaired by the Director of the Michigan Department of Agriculture and Rural Development. The board will consist of at least two Upper Peninsula representatives. One of the five members will be from a community impacted by the mines.

The Rural Development Fund will provide dollars, including matching funds, to facilitate infrastructure improvements for broadband/Internet connectivity, energy, rail and talent to strengthen rural economies, Creagh said.

Creagh said if agreement can be reached from all parties involving, including local governments and school districts, lawmakers and mining companies, the proposals could likely be acted on quickly. If no consensus can be reached, more time would be used to work out problem issues.

State proposes new mining tax

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May 19th, 2012 at 5:16 pm