The Daily Alaska empire., 1945-02-24

lpresent form" MT. Johnston ans. wered query from Senator H. H McCutcheon, as to whether it wa. the gross tax or the net income tax feature of the bill that tht mining industry opposed
 In reply to Senator Allen Shat tuck, he stated his opinion that there would surely not be more gold production in Alaska during l945 than there was in 1914
 Talks From Experience
 MT Stines opened his statement with an outline of his mining ex- perience, referring to his part ir the opening of the Nome gold fields now operated by the Hammor Mining Company, and the estab- lishment and operation of the Fair banks Exploration Go. He answered Senator McCutcheon that he is now interested in and owns some mining properties in Alaska, and that he is connected with a group interested in large postwar mining development. He later said that an unfavorable tax burden might have considerable effect on that planned future development.
 MT. Stines pictured the benefits derived by communities of the Territory from the establishment of large mining enterprises, with large payrolls, most of which work relatively low-grade ores. He con- trasted them with small high-grade operations employing but a few persons and distributing only minor benefits within the Territory.
 He lucidly explained the problems of mining operations and their relative costs, using as an illus tration the vast open-cut iron mines of Minnesota, on one hand and the placer diggings common in Interior Alaska, on the other. The severance" theory for taxing re- source e-exhausting industries is not the burden where it is applied in Minnesota, he claimed. There, the value-raiige of the iron ores is small and the price of the product IS established in an open, com- petitive market, permitting the producer to pass the tax along ? he said. In gold mining, especially he pointed out, there is a very great range in ore values and the price of the product is fixed.
 Inequities
 Stines demonstrated by figures the inequities that can exist under the gross tax on gold. He showed a possible range of the 3 per cent gold tax, when translated into a tax on net profits, of from less than 10 per cent to more than 60 per cent under possible operating conditions.
 The gross tax is "throttling the 1 type of industry you really need.' he maintained, as the burden of the tax falls heaviest on the large operations which work the low grade grounds on a small profit margin. The tax, he declared, has discouraging effect on the large capital investments necessary for such production. It is paying for the privilege of developing the country he said.
 Stating himself "an optimist where gold mining is concerned. J Stines concluded that the produc- ton of gold in Alaska has mot nearly reached it's maximum" But. he pointed out, the industry is now at low ebb with many prob- lens facing its recovery. Draglines, of the type necessary to most placer operations in Alaska, will not be available before l947, at the earliest, he said
 Senator Walker explained that the gross tax on gold had been an effort to obtain for the Territory a reasonable revenue from mines. What do you think, he asked MT. Stines, of the fact that in the year 1885, just before the gross tax was enacted, the Territory col lected from gold mines in the Second Division less than S5,O0O and from the Fourth Division only about S24,000? There must have been something wrong with your tax collecting system, was Stines answer.
 For Reasonable Revenue
 The Legislatures problem should be, the mining man continued, tc find some other, more equitable means for obtaining a reasonable revenue from the Territory's mines Pointing to the fact that all types of metal mining are exhaustive, he asked: Why is there not ''sever- lance" tax on non-ferrous minerals: ! Tt seems to me that the gros. Igold tax is more an opportunity Itax."
 Senator McCutcheon asked MT Ct;poc ssyUo,IJ vo,, ba for tha no