Three Guests This Morning Discussing The Severance Tax On InTheRightMind


Dan Adamini From InTheRightMind

December 1, 2012-

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This morning on InTheRightMind there were three guests that all discussed the proposed severance tax.

Michigan Senator Tom Casperson

First guest this morning was Michigan Senator Tom Casperson.  He said that everyone seems to agree that the way is to have a severance tax, and it’s just the nuts and bolts on the tax now that are being figured out.

What a severance tax is, is that the mining company will pay the tax based on the worth of the ore as it is being pulled out of the ground.  This is different from the current tax system, where the mining company pays upfront before they start digging and the tax is based on the estimate of what the ore body is worth.

The new system proposed is a more accurate way to tax and also a fair process for the company.  Also the upfront lump sum is a discouraging factor for some smaller companies and smaller operations in the upper peninsula.  Casperson said that his hope is that some smaller companies will enter the area and there can be multiple smaller mines that will help the area economically.

For smaller companies to enter one issue brought up is safety.  This isn’t an issue as before a mine is built that there is still bonding to take place in case of problems.  Also all the regulations are still in place, it’s just the lump sum tax would not be in place.

State Representative Matt Huuki

State Representative Matt Huuki called in next this morning, to talk on the tax.  Huuki has been the driving force behind the bill in the Michigan Congress.  When he was first elected he had heard feedback from companies that were trying to invest in mining into the area and the way the ore was taxed was a discouraging factor.  For mines it could take up to three years for a profit from the ore.  Also the original way the ore is taxed is based on guessing what the future price of the ore will be as well, which is not perfect.

There has been a focus the Eagle Mine with this issue, but the goal for Huuki was to have a good piece of legislation that helps companies invest in the area.  A good example is the gold mine in Menominee that was put on hold, with the severance tax he hopes the mine will get another look to be activated.

Marquette County Commission Chairwoman Deborah Pellow

Last today was Marquette County Commission Chairwoman Deborah Pellow as she stopped by the studio to also talk about the severance tax.  The board is not against the tax but wants to make sure there is a fair split so that the money is still flowing into the area, rather than downstate.  The board is working with multiple people over the weekend to make sure this happens.

The board is also wanting the Humboldt Mill still on the original tax system.

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