2013 Minnesota Mining Tax Guide

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2013 Minnesota Mining Tax Guide Mining Tax Guide SS J. A. Campbell in Taconite Harbor, ca. 1957-1964 (2005.0038.3318), Minnesota State Representative Fred A. Cina Papers, Iron Range Research Center, Chisholm, MN November 2013 2013 Distribution of Taconite Production Tax (2012 Production Year) Total Taconite Production Tax $102,633,021* Production tax is $2.465 per taxable ton. The average taxable tonnage was 38,310,339 tons. * Includes $8,428,275 from the State General Fund (22.0 cpt) cpt = cents per taxable ton Property tax Cities and townships School districts Counties IRRRB Other relief and misc. $13,893,864 $15,799,889 $14,270,998 $29,729,364 $16,493,071 $12,445,835 32.5 cpt 36.3 cpt 41.2 cpt 37.2 cpt 43.1 cpt 77.6 cpt City and Township Taconite School Regular IRRRB Fund** Taconite Economic Mining & Conc $0.0343 Fund** County Fund** Taconite Property $3,636,468 Development Fund Fund** $1,566,247 $9,000,065 Tax Relief $1,666,971 9.5 cpt $12,231,412 $2,066,752 4.1 cpt*** 23.5 cpt 31.9 cpt 5.4 cpt 4.4 cpt Regular School County Road and IRRRB $.1572 Fund** Bridge Fund** Fixed Fund Range Association Township Fund $6,908,326 $4,486,556 Public Works $1,252,520 of Municipalities & $1,223,128 18.0 cpt*** 11.7 cpt Projects 3.2 cpt Schools** 3.2 cpt $14,826,100 $137,802 Taconite Taconite 38.7 cpt Iron Range Higher Education Acct. 0.4 cpt Taconite railroad railroad $1,915,517 5.0 cpt Municipal Aid** $1,106,935 $784,377 2.0 cpt $6,355,475 2.9 cpt *** Producer Grant Hockey 16.6 cpt & Loan Fund Hall of Fame Building $3,176,600 $76,621 Maintenance Fund 8.3 cpt 0.2 cpt Taconite railroad $1,506,072 $591,142 3.9 cpt IRR Educational 1.5 cpt Revenue Bonds Taconite $1,411,925 Referendum** 3.7 cpt Mining effects** $3,091,236 $1,758,238 8.1 cpt Taconite Env. 4.6 cpt ** Payments to the funds are guaranteed at a Protection Fund School bond percentage level of the base year (1983 or payments 1999) by M.S. 298.225 for local aids and $13,318,892 M.S. 298.293 for property tax relief. 34.8 cpt Transferred from $3,363,147 Special City/ schools for city/ 8.8 cpt Township Fund Douglas J. Johnson township Economic Protection $157,055 Guarantee Fund $1,742,074 *** ($1,742,074) was subtracted from the Trust Fund 0.4 cpt M.S. 298.225 4.6 cpt Taconite School, Regular School and Tac RR $5,017,442 funds and transferred to cities/townships M.S. 298.293 13.1 cpt within the districts because it was above levy limitations (4.6) cpt Table of Contents 2013 PRODUCTION TAX DISTRIBUTION ..........Inside front cover Introduction Figure 1 — Iron Ore Production Comparison ................................................................................1 Minerals and Mining Agencies ..............................................................i Figure 2 — Distribution of Mining Taxes .......................................................................................2 Figure 3 — History of Minnesota Taconite Production ..............................................................3 INTRODUCTION ..................................................................................1 Figure 4 — Minnesota Taxes Levied on Taconite ..........................................................................4 TACONITE PRODUCTION TAX Taconite Production Tax (M.S. 298.24, M.S. 298.27 - 298.28) ....................................................... 5 Figure 5 — Douglas J. Johnson Economic Protection Trust Fund and Taconite Environmental Protection Fund .............................................................................. 13 Distribution of Funds (M.S. 298.28) ..............................................7 Figure 6 — Taconite Property Tax Relief Fund Balance ............................................................ 14 Aid Guarantee (M.S. 298.225) ......................................................11 Figure 7 — Taconite Property Tax Relief Fund Distribution ................................................... 14 Taconite Production Tax Distribution Calculation ....................12 Figure 8 — Taconite Residential Homestead Credit Examples ............................................... 15 Taconite Property Tax Relief .........................................................14 Figure 9 — Taconite Production Tax Distribution .................................................................... 16 Taconite Homestead Credit Example ...........................................15 Figure 10 — Taconite Production Tax Distribution to Cities & Townships - 2013 ..........17 - 20 Figure 11 — Taconite Production Tax Distributions to School Districts - 2013 .................... 21 DIRECT Reduced Iron (DRI) ....................................................26 Figure 12 — Taconite Production Tax School Bond Payments ................................................. 21 Figure 13 — Taconite Production Tax Distribution to Counties - 2013 .................................. 22 IRON RANGE RESOURCES & REHABILITATION BOARD ...27 Figure 14 — Taxable Taconite Production Tax and Revenue by Company ............................. 22 OCCUPATION TAX (M.S. 298.01, M.S. 298.16 - 298.18) ...............32 Figure 15 — 2012 Taxable Production by Product Type............................................................. 23 Figure 16 — Changing Trends in Minnesota Taconite Production........................................... 23 2012 Occupation Tax Final Directive ..........................................33 Figure 17 — Taconite Production Tax Rate History and Index Summary .............................. 24 Backup 2012 Data to Final Directive ...........................................34 Figure 18 — Taconite Produced and Production Tax Collected ................................................ 25 INCOME TAX WITHHOLDING ON MINING AND DIRECT reduced Iron (DRI) EXPLORATION ROYALTIES (M.S. 290.923) ..................................41 Figure 19 — World Direct Reduced Iron Production ................................................................. 26 SALES AND USE TAX - Taconite and Iron Ore (M.S. 297A) .........44 IRON RANGE RESOURCES AND REHABILITATION BOARD Figure 20 — Fiscal Year 2014 IRRRB Budget ............................................................................... 29 CAPITAL EQUIPMENT EXEMPTIONS AND REFUNDS ..........47 Figure 21 — Taconite Economic Development Fund Distribution ........................................... 30 Figure 22 —Taconite Industry Investments .................................................................................. 31 SALES AND USE TAX - Aggregate Material (M.S. 297A) ...............48 OCCUPATION TAX AD VALOREM TAX ON AUXILIARY MINING LANDS FOR Figure 23 — Occupation Tax Mine Value-Taconite ................................................................... 35 TACONITE OPERATIONS (M.S. 272.01) .........................................49 Figure 24 — Occupation Tax Mine Value and Occupation Tax Paid ...................................... 36 St. Louis County Mining Land Assessment Schedule ........................49 Figure 25 — Occupation Tax Paid By Company .......................................................................... 36 Figure 26 — Crude Ore Mined (Taconite) ................................................................................... 37 AD VALOREM TAX ON UNMINED TACONITE (M.S. 298.26) .50 Figure 27 — Occupation Tax Collected on Iron Ore, Direct Reduced Iron and Taconite Production ................................................................................................................................... 38 AD VALOREM TAX ON UNMINED NATURAL IRON ORE Figure 28 — Taconite Industry Occupation Tax Report Averages on a Per Ton Basis ........... 39 (M.S. 272.03, M.S. 273.02; M.S. 273.12 - 273.13, M.S. 273.165, Figure 29 — Taconite Industry Occupation Tax Report Average Cost Per Ton ...................... 40 M.S. 273.1104) .........................................................................................51 INCOME TAX WITHHOLDING ON MINING AND EXPLORATION ROYALTIES Figure 30 — Royalties Paid and Income Tax Withheld .............................................................. 42 AD VALOREM TAX ON TACONITE RAILROADS Figure 31 — Average Royalty Cost Per Ton of Pellets Produced .............................................. 43 (M.S. 270.80 - 270.88) .............................................................................53 Figure 32 — Royalty Cost Per Ton (graph) .................................................................................. 43 AD VALOREM TAX ON SEVERED MINERAL INTERESTS SALES AND USE TAX (M.S. 272.039, M.S. 272.04, M.S. 273.165) ..........................................54 Figure 33 — Use Tax Paid .............................................................................................................. 46 TAXES ON OTHER MINING AND EXPLORATION AD VALOREM TAX ON UNMINED TACONITE Figure 34 — Unmined Taconite Tax Paid ..................................................................................... 50 Ad Valorem Tax (M.S. 272 - M.S. 273) ........................................56 Net Proceeds Tax (M.S. 298.015 - 298.018) ................................57 AD VALOREM TAX ON UNMINED NATURAL IRON ORE Occupation Tax (M.S. 298.01) ......................................................58 Figure 35 — Minimum Rates.......................................................................................................... 52 Withholding Tax on Royalties (M.S. 290.923) ............................58 Figure 36 — Iron Ore Ad Valorem Tax Payable ........................................................................... 52 Sales and Use Tax (M.S. 297A) .....................................................58
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