Jim Costa: “having, as I said, held extensive hearings on this issue over the last 10 months, I think it's important that we respond…”

“having, as I said, held extensive hearings on this issue over the last 10 months, I think it's important that we respond to the comments that were made from my good friend, the gentleman from Nevada. We did have witnesses who testified on the issue of royalty. We had several witnesses that indicated that an 8 percent royalty would not be unreasonable, some even said perhaps too low. Taxpayers for Common Sense actually urged a higher rate. James Otto, a royalty consultant to governments around the world, stated that he would normally counsel a country to impose a gross royalty of between 2 and 5 percent. However, he did say that a proposed 8 percent might not necessarily be too high. Why? Because a depletion allowance, depletion allowance, which is a tax break, enjoyed by the hardrock mining industry in the United States is significant. Mr. Otto pointed out that the depletion allowance works like a negative royalty. Perhaps only four countries in the world offer such a lucrative tax break, in this case, to our mining industry. This would be offset by a potential 8 percent. A Congressional Research Service witness indicated that royalties for oil and gas and coal operators in the United States, and we want to keep these oil and gas and coal operators doing their good work, is 8 percent and more in some cases. Therefore, the fact that no royalty is charged, I think, needs to be taken into account. After all, these are public lands.”