In the past, revenue from government owned mineral rights have been collected through a combination of lease auctions, ad valorem or per unit royalties, overcharges for state services, price controls and export levies. The resource rents tax (RRT) is a recently proposed royalty which purportedly has an efficiency advantage over other forms of rent collection. This paper critically reviews the arguments which have been used to justify RRT. Possible problems with RRT are discussed, some of which have been ignored in the current literature. In addition, a new royalty is introduced, which combines an auction with a two-part output-based levy.
Australian Mining Industry Council, 1977, “Resources Taxation and Appraisal: A Press Release” (Australian Mining Industry Council, Melbourne).
2.
Averch, H. and L.L. Johnson, 1962, “Behavior of the Firm Under Regulatory Constraint”, American Economic Review, 52, 1052–69.
3.
Brown, E.C., 1948, “Business-Income Taxation and Investment Incentives”, in: Income, Employment and Public Policy, Essays in Honour of Alvin H. Hansen (Norton, New York). Reprinted in: R.A. Musgrave and C.S. Shoup, ed., 1959, Readings in the Economics of Taxation (Allen and Unwin, London).
4.
Cameron, C.W., 1975, “Industry and Government Policies for Rent Collection”, paper presented at 77th Annual CIM Conference, Toronto.
5.
Chisholm A.H., 1976, “Progressive Income Taxes, Tax-Favoured Investments and Investment Behaviour”, Australian Journal of Management, 1, 1–14.
6.
Fama, E.F., 1976, Foundations of Finance (Basic Books, New York).
7.
Flamholtz, E.G., 1971, “Should Your Organization Attempt to Value its Human Resources?”California Management Review, 14, 40–45.
8.
Garnaut, R., 1976, “The Application of a Resource Rent Tax to the Australian Mining Sector”, paper presented at Workshop on Mining and Industry Taxation in the Centre for Resource and Environmental Studies, Australian National University, Canberra.
9.
Garnaut, R. and A. Clunies-Ross, 1975, “Uncertainty, Risk Aversion and the Taxation of Natural Resource Projects”, Economic Journal, 85, 282–87.
10.
Garnaut, R. and A. Clunies-Ross, 1977, “The Neutrality of Taxes on Resources Rents”, paper presented at Workshop on Mining and Industry Taxation in the Centre for Resource and Environmental Studies, Australian National University, Canberra.
11.
Harberger, A.C., 1974, Taxation and Welfare (Little, Brown & Co., Canada).
12.
Hjorleifson, 1975, “Economic Rent: Industry and Government Policies for Rent Collection in the Canadian Mining Industry”, paper presented at 77th Annual CIM Conference, Toronto.
Industries Assistance Commission, 1976b, Report on Crude Oil Pricing (Australian Government Publishing Service, Canberra).
15.
Industries Assistance Commission, 1976c, Report on Petroleum and Mining Industries (Australian Government Publishing Service, Canberra).
16.
Johnson, D.G., 1950, “Resource Allocation under Share Contracts”, Journal of Political Economy, 58, 111–23.
17.
Lorsch, J.W. and P.R. Lawrence, 1972, “Environmental Factors and Organization Integration”, in: J.W. Lorsch and P.R. Lawrence, eds., Organization Planning: Cases and Concepts (Irwin and Dorsey, London).
18.
Marshall, A., 1956, Principles of Economics (Macmillan, London).
19.
Musgrave, R.A. and P.B. Musgrave, 1976, Public Finance in Theory and Practice (McGraw-Hill, New York).
20.
Smith, B., 1977, “Taxation of Mining Industry Profits”, paper presented to Workshop on Mining and Industry in the Centre for Resource and Environmental Studies, Australian National University, Canberra.
21.
Smith, B. and A.M. Ulph, 1976, “Economic Principles and the Taxation of the Mining Industry: An Introductory Survey”, paper presented to Workshop on Mining Industry Taxation in the Centre for Resource and Environmental Studies, Australian National University, Canberra.
22.
Stigler, G.J. and C. Friedland, 1962, “What Can Regulators Regulate?”Journal of Law and Economics, 5, 1–16.
23.
Swan, P.L., 1976a, “Income-Taxes, Profit Taxes and Neutrality of Optimizing Decisions”, Economic Record, 52, 166–81.
24.
Swan, P.L., 1976b, “Australian Mining Industry Taxation and the Industries Assistance Commission: An Appraisal of Two Reports”, paper presented to Workshop on Mining Industry Taxation in the Centre for Resource and Environmental Studies, Australian National University, Canberra.
25.
Viner, I., 1977, “Federal Government Fiscal Policies for the Encouragement of Petroleum Exploration and Its Attitude to the Return from Petroleum Discovery; a Press Release” (Australian Government, Canberra).
26.
Wilson, W.C., 1975, “Economic Rent - What Is It and Does It Exist?”paper presented at 77th Annual CIM Conference, Toronto.
