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Rent Royalties

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  • WAYNE MAYO

Abstract

On neutrality grounds, royalties designed to tax only the economic rent of mining or petroleum operations are preferable to royalty schemes currently used in Australia. The Resource Rent type of royalty generally has a predictable but asymmetrical effect on the probability distribution of the net present value of projects being considered for investment. This effect is independent of the characteristics of individual projects, and so with appropriate selection of the operating parameters, this royalty scheme would not greatly affect the screening of projects for investment purposes.

Suggested Citation

  • Wayne Mayo, 1979. "Rent Royalties," The Economic Record, The Economic Society of Australia, vol. 55(3), pages 202-213, September.
    • Handle: RePEc:bla:ecorec:v:55:y:1979:i:3:p:202-213
    DOI: 10.1111/j.1475-4932.1979.tb02222.x
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    References listed on IDEAS

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    1. Peter L. Swan, 1976. "Income Taxes, Profit Taxes and Neutrality of Optimizing Decisions," The Economic Record, The Economic Society of Australia, vol. 52(2), pages 166-181, June.
    2. Sumner, M T, 1975. "Neutrality of Corporate Taxation or On Not Accounting for Inflation," The Manchester School of Economic & Social Studies, University of Manchester, vol. 43(4), pages 353-361, December.
    3. Garnaut, Ross & Clunies Ross, Anthony, 1975. "Uncertainty, Risk Aversion and the Taxing of Natural Resource Projects," Economic Journal, Royal Economic Society, vol. 85(338), pages 272-287, June.
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