Tax Makes Iron Mining Economically Impossible
MADISON – A new mining bill would force mining companies to pay $172 million a year, and worsen Wisconsin’s climate for mining, WMC said Thursday.
“These taxes make iron mining economically impossible, and sends another message that Wisconsin is hostile to mining and the literally thousands of good paying jobs it would create,” said Kurt Bauer, President/CEO of Wisconsin Manufacturers & Commerce.
Earlier this week, Senators Dale Schultz (R-Richland Center) and Robert Jauch (D-Poplar) unveiled a bill that taxes and regulates mining in Wisconsin. Their bill applies a $7 per ton tax on the rocks that will be moved around on the mining site, which will generate an estimated $172 million a year according to a document from the nonpartisan Legislative Fiscal Bureau. The bill passed by the State Assembly exempts iron mining from these job-killing taxes.
WMC supports AB 426, which has passed the Assembly and offers the reforms needed to facilitate safe iron mining in Wisconsin. A $1.5 billion mine is under consideration near Hurley, and is projected to create more than 5,600 jobs statewide when fully operational.
“It doesn’t make any sense to impose this crushing tax burden on an industry that we hope to attract to our state,” Bauer said. “Wisconsin needs to send a signal that we welcome iron mining jobs to our state, but this bill sends the opposite message.” A recent study of mining executives by the Fraser Institute found that Wisconsin ranks in the 10 worst places in the world to conduct mining.
WMC reiterated the following observations about the Schultz/Jauch legislation:
- The bill imposes a new front-loaded $25 million surtax for the privilege of operating an iron mine in Wisconsin for the first five years. No other industry in this state faces this type of punitive tax burden. This surtax will make it harder to operate a profitable mine in the beginning stages of mining, and will therefore make it harder to justify investing in our state.
- The bill contemplates a 540 day permitting process, plus an unlimited number of open-ended extensions…with no meaningful penalty for failure to meet the deadline. This allows the permit process to drag on indefinitely, with no clear timeframe for a decision. It is impossible for an applicant to attract investors when no one knows when or if a permitting decision will be made.
- The bill also provides mandatory and open-ended off ramps from the 540 day timeline if the Army Corps of Engineers asks for more time. The Corps will decide how long the delays will last – they get as much time as they want. This dangerous precedent is something we do not allow for any other type of environmental permit. Wisconsin should not allow federal agencies to dictate the length of our permitting processes.
- The bill includes the same mandatory lawsuit built into the process before a decision is made on the permit –and ensures that DOA, not DNR, will make the final decision on the permit. This costly and time-consuming trial maintains the same uncertainty that has prevented any significant investment in mining in Wisconsin. It is unclear how turning an environmental permitting process into a litigation process will lead to the creation of mining jobs.