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Reconsidering royalty and resource rent taxes for Australian mining

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  • Freebairn, John

Abstract

It is argued that a comparative assessment of a royalty and a resource rent tax as a special tax on the Australian mining industry should recognise the following: the importance of quasi-rents earned on investments which shift out the mining supply curve over time, the dominance of nonresidents as buyers and as shareholders, and available data on relative costs for mines with more and less favourable natural resource endowments. Comparable tax rates for the two special taxes to generate similar government revenue are derived. For approximate revenue neutral taxes, the efficiency and distributional effects of the royalty and resource rent tax options are assessed and compared. In terms of efficiency, the superiority of one over the other is ambiguous because of imperfect knowledge about key parameters. In terms of returns to Australia, and in particular the aggregate of transfers from nonresident shareholders and export buyers, both provide similar outcomes.

Suggested Citation

  • Freebairn, John, 2015. "Reconsidering royalty and resource rent taxes for Australian mining," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 59(4), October.
    • Handle: RePEc:ags:aareaj:283219
    DOI: 10.22004/ag.econ.283219
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    Cited by:

    1. Fogarty, James J. & Sagerer, Simon, 2016. "Exploration externalities and government subsidies: The return to government," Resources Policy, Elsevier, vol. 47(C), pages 78-86.
    2. Valle de Souza, Simone & Dollery, Brian & Blackwell, Boyd, 2018. "An empirical analysis of mining costs and mining royalties in Queensland local government," Energy Economics, Elsevier, vol. 74(C), pages 656-662.
    3. Youmanli Ouoba, 2023. "Testing the necessary conditions for sustainability in the mining sector in Burkina Faso," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 36(1), pages 1-12, January.
    4. Drew, Joseph & Dollery, Brian Edward & Blackwell, Boyd Dirk, 2018. "A square deal? Mining costs, mining royalties and local government in New South Wales, Australia," Resources Policy, Elsevier, vol. 55(C), pages 113-122.
    5. Jason Nassios & James Giesecke, 2022. "Property Tax Reform: Implications for Housing Prices and Economic Productivity," Centre of Policy Studies/IMPACT Centre Working Papers g-330, Victoria University, Centre of Policy Studies/IMPACT Centre.
    6. Ge, Jianping & Lei, Yalin, 2018. "Resource tax on rare earths in China: Policy evolution and market responses," Resources Policy, Elsevier, vol. 59(C), pages 291-297.

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    Keywords

    Resource /Energy Economics and Policy;

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