Taxing the Rent of Non-Renewable Resource Sectors

Abstract

JT03360597Complete document available on OLIS in its original format This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. ECO/WKP(2014)45 Unclassified English -Or. English ECO/WKP(2014)45 2 OECD Working Papers should not be reported as representing the official views of the OECD or of its member countries. The opinions expressed and arguments employed are those of the author(s).Working Papers describe preliminary results or research in progress by the author(s) and are published to stimulate discussion on a broad range of issues on which the OECD works.Comments on Working Papers are welcomed, and may be sent to This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. © OECD (2014)You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgment of OECD as source and copyright owner is given. All requests for commercial use and translation rights should be submitted to rights@oecd.org ECO/WKP (2014)45 3 ABSTRACT/RESUME Taxing the Rent of Non-Renewable Resource Sectors: A Theoretical NoteThis study analyses the economic rent generated by the exploitation of a non-renewable resource, and the taxation of this rent. We present a synthetic model of a non-renewable-resource sector where deposits must be costly developed before they are exploited; the analysis emphasizes the effect of resource taxation on the discouragement to the development of new reserves. We discuss the limitations of neutral profittaxation schemes and examine the distortions caused by various resource-taxation systems on the rent and its allocation: tax evasion, royalty-induced distortions, imperfect tax commitment, agency issues... We also discuss the measurement of resource rents for taxation purposes, and issues with the management of the resource tax income. JEL Classification codes: Q30; H20. Taxer la rente d'exploitation des ressources non renouvelables : une note théoriqueCette étude analyse la rente générée par l'exploitation d'une ressource non renouvelable, ainsi que la taxation de cette rente. Dans un modèle simple, nous représentons une industrie minière dont les gisements de ressource non renouvelable, pour être exploités, requièrent des efforts de développement ; l'analyse porte principalement sur les effets néfastes de la taxation sur la production de nouvelles ressources. Nous évoquons les limites à la possibilité théorique de ponctionner les profits de manière neutre, puis examinons les distorsions impliquées par les systèmes de taxation existants : évasion fiscale, capacité d'engagement limitée, rede...

Designing fossil fuel subsidies reforms in OECD and G20 countries

“…This particular paper falls short of showing how the aggregate EMTR for the oil and gas industry in Canada compares with the EMTR in other sectors, to ascertain whether the prevailing fiscal regime for oil and gas indeed confers a preference for investment in this sector relative to other sectors. 16 The EMTR can thus be used as a first approximation of whether a country's prevailing fiscal regime encourages investment via its impact on the user cost. When measured against a benchmark fiscal system -or the EMTR facing other sectors -it can also be used to quantify the magnitude of the distortion emanating from a particular fiscal design relative to others.…”

“…Since the rationale for collecting royalties (i.e. as property rights) may be regarded as fundamentally distinct from that for taxes, their inclusion in the EMTR may not be warranted, thus distorting the resulting tax burden 16. The EMTR is one type of effective tax rates that can be used to study the effects of fiscal regimes.…”