Rent Taxation for Nonrenewable Resources

30 Pages Posted: 20 Feb 2009

See all articles by Diderik Lund

Diderik Lund

University of Oslo - Department of Economics

Multiple version iconThere are 3 versions of this paper

Date Written: January 1, 2009

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 governments, time consistency and fiscal stability, the relationship between taxes and discount rates, and transfer pricing.

Keywords: natural resources, rent tax, royalty, oil, minerals, energy

JEL Classification: B20, H20, H25, L71, O13, Q38

Suggested Citation

Lund, Diderik, Rent Taxation for Nonrenewable Resources (January 1, 2009). Available at SSRN: https://ssrn.com/abstract=1342437 or http://dx.doi.org/10.2139/ssrn.1342437

Diderik Lund (Contact Author)

University of Oslo - Department of Economics ( email )

P.O. Box 1095 Blindern
Oslo, NO-0317
Norway
+47 22855129 (Phone)
+47 22855035 (Fax)

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