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The Impact of Tax Concessions on Extraction of Non-renewable Resources:An Application to Gold Mining in Tanzania

Author

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  • Amos James Ibrahim-Shwilima

    (Graduate School of Economics, Waseda University)

  • Hideki Konishi

    (School of Political Science and Economics, Waseda University)

Abstract

Gold mining firms in Tanzania pay royalty and corporate taxes, but also receive many tax concessions. Such tax incentives may cause to reschedule their extraction plans and thereby change the expected life of a gold mine. We model a representative mining firm's extraction decision using optimal control theory, into which various tax incentives are introduced to determine their theoretical impact. Our results suggest thatin the race to take advantage of tax incentives, a firm may end up making excessive investments, which in turn increases extraction rate. Actual extraction patterns of several gold mining companies in Tanzania are also reviewed.

Suggested Citation

  • Amos James Ibrahim-Shwilima & Hideki Konishi, 2014. "The Impact of Tax Concessions on Extraction of Non-renewable Resources:An Application to Gold Mining in Tanzania," Working Papers 1403, Waseda University, Faculty of Political Science and Economics.
    • Handle: RePEc:wap:wpaper:1403
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    References listed on IDEAS

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    Cited by:

    1. Amos James Ibrahim-Shwilima, 2016. "Economic growth and nonrenewable resources: An empirical investigation," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 6(2), pages 26-41, February.
    2. Rhee, Sophia & Nyanza, Elias Charles & Condon, Madison & Fisher, Joshua & Maduka, Theresia & Benshaul-Tolonen, Anja, 2018. "Understanding environmental, health and economic activity interactions following transition of ownership in gold mining areas in Tanzania: A case of private to public," Land Use Policy, Elsevier, vol. 79(C), pages 650-658.

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    More about this item

    Keywords

    Natural resources; tax incentives; corporate tax policy;
    All these keywords.

    JEL classification:

    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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