Four years after the 9/11 attacks, it’s clear to everyone that the U.S. government is back in a big way, after years of restrained growth in the 1990s.
In April, the spendthrift Bush Administration submitted its fiscal-year 2006 budget request to the U.S. Congress. The request amounted to a record US$2.57 trillion in proposed spending, 3.6% higher than the previous fiscal year and up an astonishing 38% from the 2001 level.
The proposed budget represents nominal increases for all but four cabinet departments, and aims to raise taxes by US$14.3 billion between 2006 and 2015, mostly through seventeen new tax increases that mainly target business.
So this year, just as the U.S. mining industry is starting to get back on its feet after some very lean years, the Bush Administration, under the guise of national security, is launching a pre-emptive strike on miners’ wallets with a new tax that could rake in US$1.2 billion for the U.S. government over the next ten years.
The proposed tax is the Bureau of Alcohol, Tobacco & Firearms’ “explosives fee,” which would impose a US2 per pound tax on all explosives produced in, or imported into, the United States. That works out to a 12% rise in the retail cost of explosives. (About 80% of commercial explosives are ANFO, which typically retails for US13 per pound.)
The “fee” definitely targets America’s mining industry, since it uses 90% of the explosives made in, and imported into, the U.S. each year.
It would raise about US$120 million annually for the ATF, with the money ostensibly earmarked for salaries of ATF members who would presumably ratchet up their inspection and regulation of the nation’s explosives in order to better protect the homeland from terrorists. Or, the money might just be used to reduce the budget deficit.
The tax, being pushed by the Office of Management and Budget, can also be hiked by the attorney general if it’s not raising enough money to underwrite the ATF salaries.
On top of this, the proposed budget would allow the ATF to impose a ten-fold increase in the cost of obtaining licences and permits to use explosives.
The Washington-based National Mining Association, the umbrella group for the nation’s biggest miners, calls the proposed tax “unnecessary, unfair and not justified.”
The NMA notes that no new ATF staff will be hired to accomplish their inspection and regulatory tasks and, in fact, the revenue that will be generated will far exceed that required for salaries for the 374 full-time equivalents in the 2006 budget request.
The NMA emphasizes that the manufacture and use of explosives in the U.S. is already strictly regulated: Mining companies must comply with permitting, storage and use requirements, and mines are regularly inspected by federal and state authorities to ensure compliance with these regulations.
Says the NMA: “The mining industry is cognizant of the security needs of our country and our voluntary efforts with federal and state law-enforcement officials have prevented explosives from being used domestically by international terrorist organizations.”
Other groups fighting the new tax are the National Stone, Sand & Gravel Association (NSSGA), the Northwest Mining Association (NWMA), the Women’s Mining Coalition, and the Institute of Makers of Explosives.
While it believes licensing and permitting are necessary for the safety and security of American citizens, the NSSGA notes that “commercial explosives are not the preferred weapon of criminals and terrorists. Criminal use of explosives results in five or six deaths per year. Where terrorists have used explosives, they are mostly self-manufactured from commonly available materials, not commercial products.”
Meanwhile, the NWMA is asking Americans opposed to the new tax to phone, e-mail, fax or write members of the Senate Budget and Judiciary Committees (though the jurisdiction on the issue belongs to the latter).
Any of our U.S. readers wanting to oppose this new explosives tax can also visit the NMA’s Advocacy Campaign Team website at: www.capitolconnect.com/nma/index.aspx.
There, you can point and click to send a letter to your two U.S. senators, asking them to oppose the explosives tax.
Miners have friends in the form of Senator Richard Shelby’s (Republican-Alabama) Appropriations Committee, which dismissed the new explosives tax in June as a “creative financial scheme.”
The committee saw that the proposal would require twenty-four months to generate revenue from the new fee, meaning that no operating funds would be available in fiscal 2006. The committee commented that it was “irresponsible to budget for ongoing fiscal-year 2006 law-enforcement programs with funds that do not exist.”
As well, the House Judiciary Committee is opposed to the explosives tax, and instead will use increases in filing fees for immigration applications as its source of revenue.
Theoretically, the budget process must be completed by the end of the fiscal year — Sept. 30, 2005 — but since this is not an election year, the squabbling will likely continue through October, November and perhaps even December.
So there’s still time for everyone in the U.S. mining industry to voice their opposition to this new, predatory explosives tax.
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