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State Taxation of the Iron Ore Industry in Western Australia

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  • K. G. Williams
  • R. W. Fraser

Abstract

As a contribution to the debate over the taxation of the extractive industries, this article provides estimates of the short run and long run price elasticities of supply for iron ore in Western Australia. Using these estimates, an increase of 1 per cent in the average royalty rate on iron ore is shown to result in a short run decline of 0.61 per cent in the output of iron ore, and a long run decline of 4.36 per cent.It is concluded that raising tax revenue by ad valorem royalties on iron ore leads to a substantial distortion of output, especially after accounting for indirect effects. Copyright 1985 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research.

Suggested Citation

  • K. G. Williams & R. W. Fraser, 1985. "State Taxation of the Iron Ore Industry in Western Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 18(1), pages 30-36.
  • Handle: RePEc:bla:ausecr:v:18:y:1985:i:1:p:30-36
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    References listed on IDEAS

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    1. Barnett, Donald W. & Anderson, David L., 1983. "Taxation of uranium mining in Canada and Australia," Resources Policy, Elsevier, vol. 9(4), pages 252-260, December.
    2. 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.
    3. Campbell, H F & Lindner, R K, 1985. "Mineral Exploration and the Neutrality of Rent Royalties," The Economic Record, The Economic Society of Australia, vol. 61(172), pages 445-449, March.
    4. Emerson, Craig & Lloyd, P J, 1983. "Improving Mineral Taxation Policy in Australia," The Economic Record, The Economic Society of Australia, vol. 59(166), pages 232-244, September.
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