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Bill removing Mining License Tax Passes Legislature

Monday, April 16, 2012, Juneau, Alaska – The Alaska State Legislature yesterday unanimously passed a bill removing a significant burden to Alaska business and allowing the Department of Revenue to direct their auditing capabilities on higher-cost mineral mining operations.

House Bill 298, which was a collaborative effort by Representative Paul Seaton, R-Homer, and Senator Tom Wagoner, R-Kenai, would repeal the requirement that operators who produce sand, gravel and quarry rock products pay the mining license tax.

“The mining license tax is labeled a ‘nuisance tax’ by the state because it is costly to administer and does not bring significant revenue to the state.  Repealing the mining license tax requirement for sand and gravel operators will remove a significant burden to Alaska businesses,” Seaton said.

Sand and gravel is processed into multiple products like concrete, asphalt, concrete block, and a wide variety of aggregates. Their cost of extraction, transportation and multiple sales prices are part of the many variables sand and gravel operators use to calculate their mining license tax. The Department of Revenue ensures compliance through a very detailed audit that often costs more than the tax amount paid by the business.

“We’ve heard from several large gravel operators around the state, and a few ‘mom and pa’ outfits that spend hundreds of hours a year on administrative and accountant time gathering records, preparing schedules and returns, tracking costs for each product, and responding to state audit requests,” Sen. Wagoner explained. “The burden on the state and business is too great with very little return for the state in tax revenue. I am pleased to partner with Rep. Seaton on this bill.”

HB 298 will now be transmitted to the governor for signature. The bill will take effect immediately once it’s signed.

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