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Economic risk and mineral taxation on Indigenous lands

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  • O’Faircheallaigh, Ciaran
  • Gibson, Ginger
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    Abstract

    Mining generates risk of environmental and social harm for Indigenous peoples but can also generate substantial revenues for them, creating opportunities for community development in a context where economic and social disadvantage is the norm. Especially as mining revenues should, in part, compensate for mining’s negative social and environmental impacts, it is vital that mineral taxation on Indigenous lands reflect a careful assessment of appropriate tax mechanisms and a matching of these with community priorities. Yet little has been written that could serve as a guide for Indigenous decision makers. This article contributes to an understanding of the issues and choices facing Indigenous communities in designing mineral taxation regimes, by focusing on the question of economic risk. Risk arises as a key variable in choosing or designing a mineral taxation regime in three ways. Different approaches to mineral taxation are inherently more or less risky, in the sense that they are more or less certain to generate tax revenues. A second aspect of risk involves the degree of economic certainty or predictability associated with different types of commodities and projects. Third, the risk tolerance of Indigenous peoples and communities can vary significantly. We show how Indigenous groups can integrate and address these different dimensions of risk, by recognising the ‘risk consequences’ associated with different approaches to mineral taxation and choosing an approach that reflects, as fully as possible, the group’s risk tolerance.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0301420711000845
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    Bibliographic Info

    Article provided by Elsevier in its journal Resources Policy.

    Volume (Year): 37 (2012)
    Issue (Month): 1 ()
    Pages: 10-18

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    Handle: RePEc:eee:jrpoli:v:37:y:2012:i:1:p:10-18

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    Web page: http://www.elsevier.com/locate/inca/30467

    Related research

    Keywords: Indigenous; Mineral taxation; Economic risk; Community development; Mining; Resource development;

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    References

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    1. Grable, John & Lytton, Ruth H., 1999. "Financial risk tolerance revisited: the development of a risk assessment instrument," Financial Services Review, Elsevier, vol. 8(3), pages 163-181.
    2. James Otto & Craig Andrews & Fred Cawood & Michael Doggett & Pietro Guj & Frank Stermole & John Stermole & John Tilton, 2006. "Mining Royalties : A Global Study of Their Impact on Investors, Government, and Civil Society," World Bank Publications, The World Bank, number 7105, March.
    3. Jonathan Renshaw, 2001. "Social Investment Funds and Indigenous Peoples," IDB Publications 47778, Inter-American Development Bank.
    4. Anthony Bebbington & Leonith Hinojosa & Denise Humphreys Bebbington & Maria Luisa Burneo & Ximena Warnaars, 2008. "Contention and Ambiguity: Mining and the Possibilities of Development," Brooks World Poverty Institute Working Paper Series 5708, BWPI, The University of Manchester.
    5. Garnaut, Ross & Clunies-Ross, Anthony, 1983. "Taxation of Mineral Rents," OUP Catalogue, Oxford University Press, edition 1, number 9780198284543.
    6. James Otto & Craig Andrews & Fred Cawood & Michael Doggett & Pietro Guj & Frank Stermole & John Stermole & John Tilton, 2006. "Mining Royalties : A Global Study of Their Impact on Investors, Government, and Civil Society, Appendixes," World Bank Publications, The World Bank, number 7136, March.
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