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Rent Taxation for Nonrenewable Resources

Author

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  • Lund, Diderik

    (Dept. of Economics, University of Oslo)

Abstract

The literature on taxation of rents from nonrenewable resources uses different theoretical assumptions and methods and a variety of empirical observations to arrive at widely diverging conclusions. Many studies use models and methods which disregard uncertainty, investigating distortionary effects of different taxes on whether, when, and how to explore for, develop and operate resource deposits. Introducing uncertainty into the analysis opens a range of challenges, and leads to results which cast doubt upon the relevance of studies which neglect uncertainty. There are, however, several ways to analyze uncertainty, regarding companies' behavior, resource price processes, and diversification opportunities, all with different implications for taxation. Methods developed in financial economics since the 1980's are promising, but still not in widespread use. Some more specific topics covered in this review are optimal risk sharing between companies and gov- ernments, time consistency and scal stability, the relationship between taxes and discount rates, and transfer pricing.

Suggested Citation

  • Lund, Diderik, 2009. "Rent Taxation for Nonrenewable Resources," Memorandum 01/2009, Oslo University, Department of Economics.
  • Handle: RePEc:hhs:osloec:2009_001
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    File URL: https://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2009/Memo-01-2009.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Dobra, John & Dobra, Matt, 2013. "State mineral production taxes and mining law reform," Resources Policy, Elsevier, vol. 38(2), pages 162-168.
    2. Olleik, Majd & Auer, Hans & Nasr, Rawad, 2021. "A petroleum upstream production sharing contract with investments in renewable energy: The case of Lebanon," Energy Policy, Elsevier, vol. 154(C).
    3. Alexeev, Michael & Conrad, Robert F., 2017. "Income equivalence and a proposed resource rent charge," Energy Economics, Elsevier, vol. 66(C), pages 349-359.
    4. Castillo, Emilio, 2021. "The impacts of profit-based royalties on early-stage mineral exploration," Resources Policy, Elsevier, vol. 73(C).
    5. Söderholm, Patrik & Svahn, Nanna, 2015. "Mining, regional development and benefit-sharing in developed countries," Resources Policy, Elsevier, vol. 45(C), pages 78-91.
    6. Céline DE QUATREBARBES & Bertrand LAPORTE, 2015. "What do we know about the mineral resource rent sharing in Africa?," Working Papers 201509, CERDI.
    7. Lars Lindholt, 2019. "Effects of higher required rates of return on the tax take in an oil province," Discussion Papers 892, Statistics Norway, Research Department.
    8. Bertrand Laporte & Céline de Quatrebarbes & Yannick Bouterige, 2019. "Rent sharing and progressivity of tax regimes in the mining sector: An analysis of 21 African gold-producing countries [Partage de la rente et progressivité des régimes fiscaux dans le secteur mini," Working Papers halshs-02103047, HAL.
    9. Malafeh, Sam & Sharp, Basil, 2015. "Role of royalties in sustainable geothermal energy development," Energy Policy, Elsevier, vol. 85(C), pages 235-242.
    10. Jaakkola, Niko & Spiro, Daniel & van Benthem, Arthur A., 2019. "Finders, keepers?," Journal of Public Economics, Elsevier, vol. 169(C), pages 17-33.
    11. Lund, Diderik, 2009. "Marginal versus Average Beta of Equity under Corporate Taxation," Memorandum 12/2009, Oslo University, Department of Economics.
    12. I. A. Sokolov & S. G. Belev & O. V. Suchkova, 2021. "How to Ensure Fiscal Sustainability in Russia," Studies on Russian Economic Development, Springer, vol. 32(4), pages 383-390, July.
    13. Laporte, Bertrand & de Quatrebarbes, Céline, 2015. "What do we know about the sharing of mineral resource rent in Africa?," Resources Policy, Elsevier, vol. 46(P2), pages 239-249.
    14. Berg, Magnus & Bøhren, Øyvind & Vassnes, Erik, 2018. "Modeling the response to exogenous shocks: The capital uplift rate in petroleum taxation," Energy Economics, Elsevier, vol. 69(C), pages 442-455.
    15. Frestad, Dennis, 2010. "Corporate hedging under a resource rent tax regime," Energy Economics, Elsevier, vol. 32(2), pages 458-468, March.
    16. 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.
    17. Gunton, Cameron & Gunton, Thomas & Batson, Joshua & Markey, Sean & Dale, Daniel, 2021. "Designing fiscal regimes for impact benefit agreements," Resources Policy, Elsevier, vol. 72(C).
    18. Huhtala, Anni & Ropponen, Olli, 2020. "Resource and Environmental Policies for the Mining Industry: What Should Governments Do About the Increasing Social and Environmental Risks?," Working Papers 137, VATT Institute for Economic Research.
    19. Lindholt, Lars, 2021. "Effects of higher required rates of return on the tax take in an oil province," Energy Economics, Elsevier, vol. 98(C).
    20. 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.
    21. Jean-François Wen, 2018. "Progressive Taxation of Extractive Resources as Second-Best Optimal Policy," IMF Working Papers 2018/130, International Monetary Fund.
    22. Lund, Diderik, 2018. "Increasing resource rent taxation when the corporate income tax is reduced?," Memorandum 3/2018, Oslo University, Department of Economics.

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    More about this item

    Keywords

    Natural resources; rent tax; royalty; oil; minerals; energy;
    All these keywords.

    JEL classification:

    • B20 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)

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