Special Taxation of the Mining Industry


  • With the usual caveats, we gratefully acknowledge the insights of referees and the comments of participants at a conference on the topic organised by the Economic Society of Australia (ACT Branch) held in Canberra in September.

John Freebairn, Department of Economics, the University of Melbourne, Melbourne, VIC 3010, Australia. Email: j.freebairn@unimelb.edu.au


The efficiency and equity arguments for changing the structure of, and the aggregate level of, special taxation of the mining industry are reviewed. An economic rent base tax would cause smaller taxation distortions than the current quantity base royalties. A higher level of taxation of immobile factors, including mining resources, as part of a tax-mix change to fund lower taxation of internationally mobile capital would lead to higher Australian economic growth and after-tax returns to labour. The Brown tax, the Allowance for Corporate Capital, and versions of a resource rent tax, including the petroleum resource rent tax and minerals resource rent tax variants, are described and evaluated as measures of economic rent in the mining industry. In principle, the Brown tax has greater transparency and desired efficiency properties.