By Marion Loomis

Executive Director, Wyoming Mining Association/Original Source

Several recent newspaper editorials have made allegations that mineral severance taxes should be increased.  Headwaters Economics reported that Wyoming could “maximize even more revenue from existing production”.  For most mineral producers, payments to state, local and federal government are the largest cost of production.  The coal industry pays 40% of its gross sales in the form of taxes, royalties and fees to federal, state and local government. That does not include any federal income tax that the mining industry pays.  The state of Wyoming receives 24% of the gross.
 
It is discouraging to hear pundits rail against minerals while they continue to support using mineral money for constructing new schools, building new facilities at the University of Wyoming, granting money for new water and sewer systems, and funding new education scholarship programs.  If severance taxes were the only mineral taxes the state received from mineral production, maybe those clamoring for more taxes would have a point.  However, that is quite the contrary.  Severance taxes are only one of the revenue sources from the mining industry, and not even the largest; that dubious honor goes to the return of federal mineral royalties.  For any mineral other than coal, oil or gas, the ad valorem production tax is the biggest tax.

It is important that Wyoming folks understand that the state gets several bites at the apple when it comes to taxing minerals.  For instance the coal industry pays eight different taxes, or fees, on a unit of production.  Those include:   severance tax, ad valorem production tax, ad valorem tax on real and personal property, federal mineral royalties, abandoned mine land reclamation fees, coal bonus payments, sales taxes, state royalties and black lung fees. 

They also pay federal income taxes and workers compensation fees to the state.  The main taxes and fees a non-mineral company pays are the ad valorem tax on real and personal property, sales tax, workers compensation fees and, if they make any money, the federal income tax.

 The Wyoming Geological Survey estimates that the average selling price of coal was between $10 and $11 dollars per ton in 2008.  If one assumes $10 per ton, the total selling price of Wyoming coal was $4.6 billion in 2008.  Taxes, fees and royalties to government (local, state and federal) bonus bids, and the other fees amounted to $1.86 billion in 2008, or 40% of the selling price.  Wyoming’s share of that amounted to $1.1 billion, which is 24% of the selling price.  How much is enough?
 
 Today, the most important question for Wyoming policy makers should be how to keep the industry we have healthy.  It would be nice to hear the pundits support efforts to cut the cost of mineral extraction.  Maybe it’s time for all of us to consider not how much more we can get from the mining industry, but rather how we can promote and support an industry that is already here, contributing monumentally to the infrastructure, education and workforce in Wyoming.