Summary: An earlier GAO report assessed the impact of Federal and State taxes on the domestic minerals industry and found that their tax actions can have a significant effect on the production as well as the profitability of the domestic minerals industry. It was concluded that institutional means should be considered for better harmonizing Federal and State tax policy with national mineral production objectives. The purpose of this report is to: (1) relay comments received in response to the earlier report; (2) clarify the tax analysis capabilities of the Department of the Interior; and (3) make a final recommendation about the location of an institutional tax service capability for the States.
Given the critical interaction of Federal mineral policy, State tax policy, and the profitability of domestic mining, a formal institutional focus is needed to help assure that tax policies are compatible with national mineral production objectives, without obstructing the rights of various governmental levels to levy and collect taxes. Although the response from States was limited, none of them disputed the need for such a capability. The Department of the Interior's Bureau of Mines is informally assisting States to assess mineral tax programs, and it appears to be the logical choice to formally assume this responsibility.
