Determining the optimal tax on mining
Version of Record online: 25 JUN 2004
Natural Resources Forum
Volume 28, Issue 2, pages 144–149, May 2004
How to Cite
Tilton, J. E. (2004), Determining the optimal tax on mining. Natural Resources Forum, 28: 144–149. doi: 10.1111/j.1477-8947.2004.00081.x
- Issue online: 25 JUN 2004
- Version of Record online: 25 JUN 2004
- Ricardian rent;
- User costs;
- Non-renewable resources
This article examines three arguments often raised in support of higher taxes on mining and finds them wanting: First, the wealth or economic rents associated with particularly rich deposits rightfully belong to the citizens of the host country. Second, mining companies should compensate the State and the public for their use of mineral resources, given the intrinsic value arising from their non-renewable nature. Third, the division of the wealth created by mining is unfair. Too much goes to mining companies, and too little to the host country to promote economic development.
It suggests instead that host governments should maximize the net present value of the social benefits flowing from their mineral sector. In practice, unfortunately, it is often difficult to know whether this objective is served by raising or lowering the level of taxation on mining.