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Capital IconMinnesota Legislature

HF 2070

as introduced - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.
  1.1                          A bill for an act 
  1.2             relating to taxation; taconite production tax; setting 
  1.3             a permanent tax rate; increasing certain distributions 
  1.4             to the taconite economic development fund; amending 
  1.5             Minnesota Statutes 1998, sections 298.24, subdivision 
  1.6             1; and 298.28, subdivision 9a. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 1998, section 298.24, 
  1.9   subdivision 1, is amended to read: 
  1.10     Subdivision 1.  (a) For concentrate produced in 1997 and 
  1.11  1998 1999 and thereafter, there is imposed upon taconite and 
  1.12  iron sulphides, and upon the mining and quarrying thereof, and 
  1.13  upon the production of iron ore concentrate therefrom, and upon 
  1.14  the concentrate so produced, a tax of $2.141 per gross ton of 
  1.15  merchantable iron ore concentrate produced therefrom.  
  1.16     (b) For concentrates produced in 1999 and subsequent years, 
  1.17  the tax rate shall be equal to the preceding year's tax rate 
  1.18  plus an amount equal to the preceding year's tax rate multiplied 
  1.19  by the percentage increase in the implicit price deflator from 
  1.20  the fourth quarter of the second preceding year to the fourth 
  1.21  quarter of the preceding year.  "Implicit price deflator" for 
  1.22  the gross national product means the implicit price deflator 
  1.23  prepared by the bureau of economic analysis of the United States 
  1.24  Department of Commerce.  
  1.25     (c) On concentrates produced in 1997 and thereafter, an 
  1.26  additional tax is imposed equal to three cents per gross ton of 
  2.1   merchantable iron ore concentrate for each one percent that the 
  2.2   iron content of the product exceeds 72 percent, when dried at 
  2.3   212 degrees Fahrenheit. 
  2.4      (d) (c) The tax shall be imposed on the average of the 
  2.5   production for the current year and the previous two years.  The 
  2.6   rate of the tax imposed will be the current year's tax rate 
  2.7   determined under this subdivision.  This clause paragraph shall 
  2.8   not apply in the case of the closing of a taconite facility if 
  2.9   the property taxes on the facility would be higher if this 
  2.10  clause and section 298.25 were not applicable.  
  2.11     (e) (d) If the tax or any part of the tax imposed by this 
  2.12  subdivision is held to be unconstitutional, a tax of $2.141 per 
  2.13  gross ton of merchantable iron ore concentrate produced shall be 
  2.14  imposed.  
  2.15     (f) (e) Consistent with the intent of this subdivision to 
  2.16  impose a tax based upon the weight of merchantable iron ore 
  2.17  concentrate, the commissioner of revenue may indirectly 
  2.18  determine the weight of merchantable iron ore concentrate 
  2.19  included in fluxed pellets by subtracting the weight of the 
  2.20  limestone, dolomite, or olivine derivatives or other basic flux 
  2.21  additives included in the pellets from the weight of the 
  2.22  pellets.  For purposes of this paragraph, "fluxed pellets" are 
  2.23  pellets produced in a process in which limestone, dolomite, 
  2.24  olivine, or other basic flux additives are combined with 
  2.25  merchantable iron ore concentrate.  No subtraction from the 
  2.26  weight of the pellets shall be allowed for binders, mineral and 
  2.27  chemical additives other than basic flux additives, or moisture. 
  2.28     (g) (f)(1) Notwithstanding any other provision of this 
  2.29  subdivision, for the first two years of a plant's production of 
  2.30  direct reduced ore, no tax is imposed under this section.  As 
  2.31  used in this paragraph, "direct reduced ore" is ore that results 
  2.32  in a product that has an iron content of at least 75 percent.  
  2.33  For the third year of a plant's production of direct reduced 
  2.34  ore, the rate to be applied to direct reduced ore is 25 percent 
  2.35  of the rate otherwise determined under this subdivision.  For 
  2.36  the fourth such production year, the rate is 50 percent of the 
  3.1   rate otherwise determined under this subdivision; for the fifth 
  3.2   such production year, the rate is 75 percent of the rate 
  3.3   otherwise determined under this subdivision; and for all 
  3.4   subsequent production years, the full rate is imposed. 
  3.5      (2) Subject to clause (1), production of direct reduced ore 
  3.6   in this state is subject to the tax imposed by this section, but 
  3.7   if that production is not produced by a producer of taconite or 
  3.8   iron sulfides, the production of taconite or iron sulfides 
  3.9   consumed in the production of direct reduced iron in this state 
  3.10  is not subject to the tax imposed by this section on taconite or 
  3.11  iron sulfides. 
  3.12     (g) For purposes of distribution of the tax proceeds under 
  3.13  section 298.28, "implicit price deflator" means the implicit 
  3.14  price deflator for the gross domestic product prepared by the 
  3.15  Bureau of Economic Analysis of the United States Department of 
  3.16  Commerce, from the fourth quarter of the second preceding year 
  3.17  to the fourth quarter of the preceding year. 
  3.18     Sec. 2.  Minnesota Statutes 1998, section 298.28, 
  3.19  subdivision 9a, is amended to read: 
  3.20     Subd. 9a.  [TACONITE ECONOMIC DEVELOPMENT FUND.] (a) 
  3.21  15.4 25.4 cents per ton for distributions in 1996, 1998, 1999, 
  3.22  and 2000 and 20.4 cents per ton for distributions in 1997 shall 
  3.23  be paid to the taconite economic development fund.  For each of 
  3.24  the following nine years thereafter, the amount per ton for 
  3.25  distributions must be increased 1.7 cents over the amount for 
  3.26  the previous year and paid to the taconite economic development 
  3.27  fund.  No distribution shall be made under this paragraph in any 
  3.28  year in which total industry production falls below 30 million 
  3.29  tons. 
  3.30     (b) An amount equal to 50 percent of the tax under section 
  3.31  298.24 for concentrate sold in the form of pellet chips and 
  3.32  fines not exceeding 5/16 inch in size and not including crushed 
  3.33  pellets shall be paid to the taconite economic development 
  3.34  fund.  The amount paid shall not exceed $700,000 annually for 
  3.35  all companies.  If the initial amount to be paid to the fund 
  3.36  exceeds this amount, each company's payment shall be prorated so 
  4.1   the total does not exceed $700,000. 
  4.2      Sec. 3.  [EFFECTIVE DATE.] 
  4.3      Section 1 is effective for concentrates produced in 1999 
  4.4   and thereafter.  Section 2 is effective for distributions in 
  4.5   2000 to 2009.