Rent Taxation for Nonrenewable Resources

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents inThe 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 governments, time consistency and fiscal stability, the relationship between taxes and discount rates, and transfer pricing. JEL classification numbers: B20, H20, H25, L71, O13, Q38

Resource Extraction Contracts Under Threat of Expropriation: Theory and Evidence

“…When marginal tax rates differ across countries, transfer pricing allows a company to shift profits between tax jurisdictions to minimize the overall tax burden. A typical method for a company is to overstate its costs, claim excessive management fees, or provide capital equipment at above market leasing costs (Lund, 2009). Therefore, it may be difficult to design a unilateral welfare-improving deviation from linear taxes toward high marginal tax rates.…”

Corporate hedging under a resource rent tax regime

“…While a large strand of literature studies how rent taxes may distort firms' operating and investment decisions (Baunsgaard, 2001;Lund, 2009;McPhail, Daniel, King, Moran, & Otto, 2009;Otto et al, 2006) Although this study has been motivated by the Norwegian hydropower and petroleum tax regimes, its implications are probably not confined to Norway. Various oil, gas and mineral tax regimes designed to extract rent are applied all over the world; see Table 3 in Baunsgaard (2001) for an overview.…”

“…Interested readers may also consult the references therein, e.g., Bulow & Summers (1984) and Fane (1987). More recent discussions are provided by Lund (2009) and Boadway and Keen (2009). Updated information about the Norwegian hydro power tax regime may be found in Sections 9 and 21 of Ot.prp.…”

Trends and trade-offs in petroleum tax design

“…For more theoretical and general approaches to the taxation of non-renewable natural resources, see and Lund (2009)…”

“…The design of the tax system must also be adjusted to the prospectivity of the projects to hand -a high effective tax rate is only appropriate for highly prospective projects. Optimum risk sharing and allocation of cash flow over the project lifetime between host government and IOC often call for the latter to 3 Osmundsen (2005) and Lund (2009). fund the initial investment. The high front-end loading of costs and the high level of risk borne by the IOC require it to retain a substantial part of the upside if the project is successful.…”