Reconsidering royalty and resource rent taxes for Australian mining

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 eff..