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Marginal Effective Tax Rates for Capital in the Canadian Mining Industry

Author

Listed:
  • Robin Boadway
  • Neil Bruce
  • Ken McKenzie
  • Jack Mintz

Abstract

The authors model a firm that explores, develops, and extracts a depletable asset, taking into account various features of Canadian corporate and Ontario and Quebec mining tax law. They derive the user cost of capital and effective tax rate for investments undertaken by a mining firm. Calculations based on 1985 tax law show that there is considerable dispersion in effective tax rates, most being negative, especially for processing assets. The authors conclude that these taxes have been very poor collectors of mining rents compared to a neutral cash flow tax. Coauthors are Neil Bruce, Ken McKenzie, and Jack Mintz.

Suggested Citation

  • Robin Boadway & Neil Bruce & Ken McKenzie & Jack Mintz, 1987. "Marginal Effective Tax Rates for Capital in the Canadian Mining Industry," Canadian Journal of Economics, Canadian Economics Association, vol. 20(1), pages 1-16, February.
  • Handle: RePEc:cje:issued:v:20:y:1987:i:1:p:1-16
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    Citations

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    Cited by:

    1. Lasserre, Pierre, 1990. "La fiscalité des ressources non renouvelables : anciennes et nouvelles questions," L'Actualité Economique, Société Canadienne de Science Economique, vol. 66(4), pages 403-420, décembre.
    2. Kim Scharf, 1999. "Tax incentives for extraction and recycling of basic materials in Canada," Fiscal Studies, Institute for Fiscal Studies, vol. 20(4), pages 451-477, December.
    3. Smith, James L., 2014. "A parsimonious model of tax avoidance and distortions in petroleum exploration and development," Energy Economics, Elsevier, vol. 43(C), pages 140-157.
    4. Jeremy Smith, 2004. "Productivity Trends in the Coal Mining Industry in Canada," CSLS Research Reports 2004-07, Centre for the Study of Living Standards.
    5. Harchaoui, Tarek M. & Lasserre, Pierre, 1995. "Testing the impact of taxation on capacity choice: A 'putty clay' approach," Journal of Public Economics, Elsevier, vol. 56(3), pages 377-411, March.
    6. Chun-Yan Kuo & Steven Clark, 1991. "An Evaluation of the Exploration Tax Credit," Development Discussion Papers 1991-14, JDI Executive Programs.
    7. Bob Hamilton & Jack Mintz & John Whalley, 1991. "Decomposing the Welfare Costs of Capital Tax Distortions: The Importance of Risk Assumptions," NBER Working Papers 3628, National Bureau of Economic Research, Inc.
    8. Smith, James L., 2013. "Issues in extractive resource taxation: A review of research methods and models," Resources Policy, Elsevier, vol. 38(3), pages 320-331.

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