Tax hike! Tax hike! A Republican legislator is proposing a tax hike!
Senator Michael Rohl (R-1/Aberdeen) proposes Senate Bill 7 to increase South Dakota’s tax on gold.
Currently South Dakota imposes a severance tax on gold. For every ounce of gold you mine, extract, or produce, you have to pay the state $4. The Legislature set that severance tax rate in 1994. Senator Rohl says the state should get a bigger piece of the action: his Senate Bill 7 would replace “four dollars per ounce” with “one percent of the market value” as determined by “the average London Bullion Market Association price of gold, over the calendar quarter in which the gold was severed.”
At current gold prices, instead of $4 per ounce, gold miners would pay over $40 an ounce. Who’d have thought a Republican would kick off the 2026 Session by proposing a 10-fold tax hike?
To figure out how much money Senator Rohl’s SB 7 might raise, let’s look at how South Dakota taxes gold.
We spare small-time prospectors any trouble by exempting the first 20 ounces of any precious metals severed each year. At yesterday’s London price of $4,480.80 per ounce, you can pick or pan $89,616 worth of gold out the Black Hills and pay the good people of South Dakota not one thin dime.
But anyone who strikes it richer has to pay a quadruple tax on their gold. On top of SDCL 10-39-43‘s $4 per ounce, SDCL 10-39-68 imposes another $4 per ounce on any precious metal whose quarterly average price is $800 or more, which has been the case for gold every quarter since 2009 Q1. SDCL 10-39-45.1 imposes a 10% tax on the net profits from the sale of precious metals severed here—an income tax on gold miners! Finally, SDCL 10-39-56 requires miners to pay 8% “of the value received for the right to sever precious metals” out of the distributions they make to their royalty and working interest owners—another income tax!
Coeur Mining runs the only operating corporate gold mine in the state, the Wharf Mine right next to Terry Peak. In 2024 Coeur reported producing 98,042 ounces of gold at Wharf [Couer Mining Annual Report 2024, p. 32]. Coeur predicted similar output from Wharf for this year and estimated that Wharf had 757,000 ounces of proven or probable gold left to profitably mine [p. 34].
Coeur says it paid $10,679,000 in income and mining tax on its Wharf operations [p. 78]. $784,176 of that would have been the severance tax, $4 per ounce from SDCL 10-39-43 plus $4 per ounce from SDCL 10-39-68, for a total of $8 per ounce for 98,022 ounces (after exempting the first 20 ounces).
SB 7 changes the initial $4 per ounce to 1% of the average quarterly LBMA price. Since October 1, the average daily LBMA price for gold has been $4,134.05 per ounce. SB 7’s 1% tax would assess $41.34 per ounce severed. On 2024’s yield of 98,042 ounces, SB 7 would have collected $4,052,276.08, 10.3 times more than the $392,088 that SDCL 10-39-43 collected. SB 7 would thus increase state revenue from the Wharf mine by $3,660,188.
But wait—there’s more! says quasi-Canadian mining outfit Dakota Gold. They’re digging around next door to Wharf and don’t think they’ll start producing gold until 2029. But if they do, they conservatively estimate that they can pull from the earth another 2.6 million ounces of gold over 17 years, an annual average yield of about 150,000 ounces. Current law would collect ( 150,000 ounces × $8 = ) $1.2 million in severance taxes from Dakota Gold. Assuming gold remains at its current record high price, SB 7 would change that formula to ( 150,000 ounces × $4,134.05 × 0.01 + 150,000 ounces × $4 = ) $6.8 million in severance taxes, $5.6 million more than current law generates.
Senator Rohl’s tax hike thus promises $3.7 million more just from Coeur/Wharf in its first year and $9.3 million more per year if Dakota Gold doubles the number of corporate gold-diggers.
Senator Michael Rohl justifies his tax hike as an effort to collect a more proportionate share of the non-renewable wealth that corporate miners wrest from the sacred Black Hills:
Gold is a limited commodity that isn’t found everywhere. Our state hasn’t updated our taxes on gold to accurately reflect its increase in value over the decades and I believe my bill will generate millions of dollars in ongoing revenue for the state moving forward. These South Dakota goldmines are owned by publicly traded companies that are taking advantage of South Dakota’s resources without fair compensation to the taxpayers of the state. My bill puts the taxes back on par to what the 90s legislature that created them envisioned by removing the static number and making it a percentage of value that is equivalent to the original ratio [Sen. Michael Rohl, FB post, 2025.12.19].
Rohl is right: SB 7 will generate millions more per year for South Dakota. $3.7 million right away and even $9.7 million if Dakota Gold comes online isn’t nearly big enough to fund comprehensive property tax reform. But we could use $3.7 million to give each of South Dakota’s 10,000-some K-12 teachers $370 raise. Or maybe we could use the additional revenue from SB 7 to promote cultivation of Boswellia sacra and Commiphora trees, maybe out in the warm, dry Badlands. Then we could update SB 7 to tax frankincense and myrrh.
Of course, if Senator Rohl really wants to put severance taxes on a par with the original ratio, he’d amend SB 7 to reverting the precious severance tax to its 1994 form: before we imposed the flat $4/ounce severance tax, we taxed miners 2% of the gross yield from their precious metal sales. That makes more sense than preserving flat dollar amount in the additional severance tax of SDCL 10-39-68, which with inflation inevitably dwindles to economic insignificance.
But let’s not push our luck. I’m all for increasing taxes on corporations profiting from environmentally destructive activities, but I’m also a liberal Democrat interested in saving the poor and the planet from billionaires. Even with a Republican sponsor, Senate Bill 7’s 1% gold severance tax may face significant opposition, not just from the two corporations that will pay most of it, but from all of those Republican legislators who campaign on their party platform’s promise of lower taxes.
Merry Seasonal Greetings, Cory. If I wasn’t so involved with the three NFL and five NBA games on tv today, I’d tell you how COEUR will get around the tax increase.
In short, the same way Phillips 66 and Exeter got around the increased fuel taxes on pumped crude in the 70’s.
P
Mike Rohl is trying to shield his party from being the Earth haters they are. Visitors and skiers at Terry Peak in the occupied Black Hills are increasingly concerned by the encroachment of a massive tailings pile and ever-widening mining scars from decades of scorched earth. But the Black Hills of South Dakota and Wyoming are hardly the only public lands plundered by foreign companies under cover of the General Mining Law of 1872 that was enacted to settle Civil War debt and rob Indigenous peoples of their homes and human rights.