Montana Coal Council
Working for the Coal Industry of Montana
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Montana Coal Industry Taxes Paid
Severance Tax
Prior to 1975, Montana's coal severance tax was assessed on a cents-per-ton basis. In 1975 the Legislature enacted the highest severance tax in the nation, based on percentage of the mine-mouth price of the coal. The percentage was tied to the heating quality of the coal -- 30% for subbituminous and 20% for lignite. However, the 1987 Legislature enacted a law to gradually reduce the taxes on coal in 5% increments over the next few years if a target tonnage of 32.2 million tons was produced in Fiscal Year 1988. That target was met; and the tax dropped to 25% on July 1, 1988; to 20% on July 1, 1990; and to 15% on July 1, 1991. Since the enactment of the coal severance tax in 1975, a total of $1,724,120,000 has been collected ($49,564,000 in FY 2008/09). The money has been deposited in various earmarked funds, with 50% going into the Permanent Coal Trust Fund. At present that Trust Fund holds $794,638,861.
Source: Montana Dept. of Revenue
Net (prior to 1975) and Gross Proceeds Taxes
These are additional taxes paid on the value of the coal to support county government in the counties where the mines are located. $388,267,630 has been collected by Big Horn, Richland, Musselshell and Rosebud Counties through FY 2008. The figure for FY 2009 is $15,518,960, bringing the total to date to $403,786,590.
Source: Montana Dept. of Revenue
Resource Indemnity Trust Tax
As of 1973, all nonrenewable resource producers have been required to pay this tax which on coal is now 0.4 percent of gross value. The total collections from FY 1974 through FY 2008 were $36,100,845. The FY 2009 figure was $1,465,476 making the total taxes paid $37,566,321.
Source: Montana Dept. of Revenue
Federal Taxes
In addition to state taxes, Montana surface mining operations pay a tax for abandoned mine reclamation, mostly abandoned hardrock mines, consisting of 9 cents per ton for lignite or 31.5 cents per ton for all other types of coal.
Also 4.4% of the FOB mine price (less the black lung tax) or 55 cents per ton, whichever is less, is paid for black lung disease victims, even though this disease is primarily suffered by underground miners.
Royalties
Unlike a tax paid to government on the production of coal or its realized profits, royalties are a monetary payment to the owner of the coal as agreed upon in the terms of pre-mining leases. State and federal government still are major beneficiaries of these payments, however, because a large percentage of the mineral right ownership of coal in Montana has been retained by the federal government, with payments from the coal producing school sections going to the state. In addition, the 1976 federal leasing law mandates that 50% of the royalties collected from development of federal leases be returned to the state. Other coal lessors include Indian tribes and private (or fee) owners.
| Best Available Figures Cumulative Royalty Payments from Montana Surface Mining Operations through December, 2009 |
|||||
|---|---|---|---|---|---|
| Company | Federal | State | Indian | Private | Total |
| Signal Peak |
$1,808,000
|
$1,808,000
|
|||
| Decker Coal | $367,134,124 | $63,528,072 | $114,203,173 |
$544,865,369
|
|
| Spring Creek | $212,821,195 | $30,938,954 | $15,694,782 |
$259,454,931
|
|
| Western Energy | $234,300,593 |
$5,014,932
|
$152,114,888 |
$391,430,413
|
|
| Westmoreland Resources |
$4,617,797
|
$99,686,595
|
$953,442
|
$105,257,834
|
|
| Westmoreland Savage |
$4,085,471
|
$1,196,553
|
$5,282,024
|
||
| Totals | $818,341,383 | $104,099,755 | $99,686,595 | $285,970,838 | $1,308,098,571 |
Source: Individual Companies