Legislature(2005 - 2006)

03/22/2006 09:49 AM House W&M


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Audio Topic
09:49:27 AM Start
09:49:36 AM HB418
10:00:32 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 418-MINING PROD. & LICENSE TAXES/ROYALTIES                                                                                 
                                                                                                                                
9:49:36 AM                                                                                                                    
                                                                                                                                
CHAIR WEYHRAUCH announced  that the only order  of business would                                                               
be HOUSE  BILL NO. 418, "An  Act relating to a  mining production                                                               
tax; relating to  the mining license tax;  relating to production                                                               
royalties   on  minerals;   relating  to   exploration  incentive                                                               
credits; and providing for an effective date."                                                                                  
                                                                                                                                
9:50:14 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON informed the  committee that since the last                                                               
hearing on  HB 418,  a committee substitute  (CS) was  drafted to                                                               
realign the bill to the  current mining license tax structure yet                                                               
with adjustments  made to  rentals to  provide a  more reasonable                                                               
return  to   [Alaska  residents].    The   earlier  bill  version                                                               
presented somewhat  of a dichotomy,  he relayed, in that  it went                                                               
from a  net profit tax to  a gross unlike the  proposed petroleum                                                               
production profits tax (PPT) which  goes "from a gross production                                                               
to a net."                                                                                                                      
                                                                                                                                
9:53:10 AM                                                                                                                    
                                                                                                                                
SCOTT  BRENNAN,  Campaign   Director,  Alaskans  for  Responsible                                                               
Mining,  a coalition  of 19  conservation, tourism,  fishing, and                                                               
native organizations, explained that  the coalition is working to                                                               
raise public  awareness of  the impacts  of the  mining industry.                                                               
He further clarified  that the coalition supports  HB 418 because                                                               
the  legislation  aims  to improve  regulations  [in  the  mining                                                               
industry] to ensure  that the benefits to  Alaskans are maximized                                                               
and  the risks  are minimized.   He  relayed that  he often  asks                                                               
Alaska  residents  to  imagine  they own  a  sizeable  amount  of                                                               
mineral-rich land  and to determine  what they would  consider to                                                               
be  a fair  market value  for  the sale  of those  minerals to  a                                                               
foreign-owned mining  industry wishing  to purchase and  sell the                                                               
deposits.    He  noted  that  in  terms  of  fair  market  value,                                                               
Representative  Seaton's proposal  might "look  a bit  modest" if                                                               
one were to think  of its proposed 3 percent of  the value of the                                                               
mineral which would  [only] be $30,000 if the  mineral value were                                                               
$1 million.   He highlighted that Alaska and Nevada  are the only                                                               
states  with  a  profits-based  royalty  -  one  which  generally                                                               
provides  the lowest  rate of  return  to the  residents of  that                                                               
particular  state.   He said  that his  coalition encourages  the                                                               
committee to "look  at what is done nationally  and also consider                                                               
[today's]  record-high mineral  prices ...."   He  noted that  it                                                               
could  be  argued  that  the current  net-profit  system  is  not                                                               
consistent with the constitutional  requirement that the resource                                                               
development  provide the  maximum benefit  to the  people of  the                                                               
state.    He  expressed  his  encouragement  that  the  committee                                                               
ensures  that  the  mining   companies,  many  foreign-owned  and                                                               
experiencing record profits, pay their  fair share just as former                                                               
governors, Jay S. Hammond and  Walter J. Hickel, have argued they                                                               
should.   In conclusion, he  opined that  "there is no  reason an                                                               
Alaskan who's  working at  one of these  mines should  pay higher                                                               
taxes  than   the  foreign-owned   companies  profiting   at  our                                                               
expense."                                                                                                                       
                                                                                                                                
9:57:55 AM                                                                                                                    
                                                                                                                                
CHAIR WEYHRAUCH determined there was no further testimony.                                                                      
                                                                                                                                
9:58:30 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WILSON moved  to adopt the CS for  HB 418, Version                                                               
24-LS1456\S, Chenoweth/Bullock, 3/22/06  as the working document.                                                               
There being no objection, Version S was before the committee.                                                                   
                                                                                                                                
9:58:58 AM                                                                                                                    
                                                                                                                                
IAN  LAING, staff  to Representative  Paul  Seaton, Alaska  State                                                               
Legislature, on  behalf of Representative  Seaton, sponsor  of HB
418, informed  the committee  that Version  S amends  the current                                                               
license tax with  changes to the royalty as well  as to the rents                                                               
for both coal and minerals.                                                                                                     
                                                                                                                                
10:00:01 AM                                                                                                                   
                                                                                                                                
CHAIR WEYHRAUCH announced that HB 418 would be held over.                                                                       
                                                                                                                                
REPRESENTATIVE SEATON informed the  committee that a side-by-side                                                               
comparison of  Version S and  the original  bill can be  found in                                                               
the committee packets.                                                                                                          

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