Rent Taxation for Nonrenewable Resources

Diderik Lund

Memo 01/2009

Last ned memo

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 e ects of di erent 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 diversi cation opportunities, all with di erent implications for taxation. Methods developed in nancial 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 scal stability, the relationship between taxes and discount rates, and transfer pricing.

Published June 20, 2014 11:07 AM - Last modified Jan. 24, 2019 11:43 AM