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Rent Taxes and Royalties in Designing Fiscal Regimes for Non-Renewable Resources

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  • Robin Boadway
  • Michael Keen

Abstract

A fundamental issues in designing any fiscal regime for non-renewable resources is the balance between rent taxes and royalties. This paper reviews the core issues that arise, in terms of both efficient rent extraction and correcting various market failures. Issues of asymmetric information, for instance, can rationalize using both instruments. The paper also shows that, even though they effectively involve the choice of distinct parameters at several dates, rent taxes are not subject to the time consistency problem that is central to the extractive industries, but royalties are (although time consistent royalty policy is efficient conditional on initial resource stocks).

Suggested Citation

  • Robin Boadway & Michael Keen, 2014. "Rent Taxes and Royalties in Designing Fiscal Regimes for Non-Renewable Resources," CESifo Working Paper Series 4568, CESifo.
    • Handle: RePEc:ces:ceswps:_4568
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    References listed on IDEAS

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    Cited by:

    1. Celine de Quatrebarbes & Bertrand Laporte, 2015. "What do we know about the mineral resource rent sharing in Africa?," CERDI Working papers halshs-01146279, HAL.
    2. Beer, Sebastian & Loeprick, Jan, 2017. "Taxing income in the oil and gas sector — Challenges of international and domestic profit shifting," Energy Economics, Elsevier, vol. 61(C), pages 186-198.
    3. DAUBANES, Julien & LASSERRE, Pierre, 2011. "Optimum Commodity Taxation with a Non-Renewable Resource," Cahiers de recherche 03-2011, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    4. Malafeh, Sam & Sharp, Basil, 2015. "Role of royalties in sustainable geothermal energy development," Energy Policy, Elsevier, vol. 85(C), pages 235-242.
    5. Orlov, Anton, 2015. "An assessment of proposed energy resource tax reform in Russia: A static general equilibrium analysis," Energy Economics, Elsevier, vol. 50(C), pages 251-263.

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    More about this item

    Keywords

    rent tax; royalties; resource taxation;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General

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