Taxation of copper and nickel ores mining in Australia, Canada, Chile, Kazakhstan and USA

The subject. This article discusses the taxation of copper and nickel extraction in Australia, Canada, Chile, Kazakhstan and USAThe purpose of the article is to confirm or disprove the hypothesis that the experience of taxation of copper and nickel extraction in Australia, Canada, Chile, Kazakhstan and USA may be used for modifying the mineral extraction tax (MET) in Russia in order to increase the share of resource rent collected by the government.The methodology of research includes legal interpretation and economic analysis of the tax legislation in United States, Canada, Australia, Chile and Kazakhstan as countries with a well-developed tax system and a significant size of the mining sector in overall GDP.The authors select the legislative acts of these countries and regions that determine the procedure for collecting taxes in the extraction of metal ores, including those containing copper and nickel, as well as in the production of copper and nickel. The selected legislative acts are analyzed to determine the essential parameters of taxation. Particular attention is paid to the method of calculating the tax base, taking into account the approach to assessing the value of the taxable object, permissible tax deductions and exceptions, which allows authors to test the hypothesis put forward by determining which part of the value of a mineral resource is withdrawn during taxation.The main results, scope of application. Mineral extraction tax is the main tool for collecting natural resource rent in Russia. However, the level of taxation of solid minerals and coal is disproportionately low compared to their share in the production and export of raw materials. Thus, in 2018, the amount of MET on all minerals totaled 100.5 billion rubles, while the MET collected from oil and natural gas amounted to 5,979.6 billion rubles, i.e. 60 times as much. At the same time, the role of solid minerals in the Russian economy is comparable to the role of oil and gas. The share of the main types of minerals in the exports of the Russian Federation in 2018 was 20.4% compared to 56% for oil and gas, i.e. the difference of less than three times. The contribution of the industries related to the extraction of minerals and production of metals (mining of coal, ores, diamonds, metallurgy, fertilizer production) to the Russian GDP is about half as much as that of industries involved in the extraction and processing of oil and natural gas (7% and 14% of GDP respectively).In view of the above, it is important to develop a new approach to the taxation of solid minerals in Russia based on the world’s best practices. In order to identify the general principles of their taxation, we have conducted a detailed analysis of the tax legislation in a number of countries with a well-developed tax system and a significant size of the mining sector (the United States, Canada, Australia, Chile and Kazakhstan). We focused on the taxation of copper and nickel ores mining.Conclusions. The analysis of the international experience of taxation of copper and nickel mining sector reveals the following trend: the tax is calculated based on the market value of the extracted minerals, which is linked to the price quotes for the relevant product on an organized metal exchange (for example, the price of pure metal on the London Metal Exchange). This approach can be used in the Russian tax practice in several ways. First, Russia can adopt the Australian model where royalty on a mineral resource can be levied at the time of sale of the useful component irrespective of the processing stage (ore, concentrate or metal). The second potential model is based on the actual sale price of the product (provided it is sold in an arm’s length transaction) after deducting the costs of processing (i.e., smelting, enrichment etc., depending on the stage of processing) to arrive at the market value of the ore at the "mine mouth". The third is the Canadian model which is similar to the second one, but with the extraction costs also deducted from the sale price.

The causative relationship between natural resource rent and economic growth: evidence from Ghana’s crude oil resource extraction

Purpose While the relationship between natural resource rent and economic growth is well documented in the literature, not much robust analysis has been done to estimate the causative relationship between oil resource rent and economic growth in Ghana. This might be due to the fact that commercial production of crude oil started not long ago in Ghana. This paper aims to examine the causal relationship between oil resource rent and economic growth for the period of 2011 to 2020 in Ghana. Design/methodology/approach The study incorporates economic growth as a function of oil resource rent, non-oil revenue, foreign direct investment, capital and interest rate in a Cobb–Douglass production function/model. The study used four different estimation strategies including the autoregressive distributed lags model, Toda–Yamamoto test approach, nonlinear autoregressive distributed lags model and nonlinear Granger causality. Findings The main finding revealed that 1% increase in oil resource rent generates 0.84% increase in economic growth of Ghana in the long run. Contrary, the authors find an insignificant positive effect of oil resource rent on economic growth of Ghana in the short run for the period under study. The result from the Toda–Yamamoto test approach also showed a unidirectional causality running from oil resource rent to economic growth of Ghana, providing evidence in support of the resource blessing hypothesis in Ghana. The results are robust to two different alternative estimation strategies. Originality/value The causal relationship between crude oil resource rent and economic growth is examined.

Labor Markets in Resource-Type Regions

The modern economic literature has accumulated enough data indicating that labor markets have local specifics, and a single all-Russian labor market is an abstraction. Therefore, the characterization of the Russian labor market as a system of separate regional markets is very important. The purpose of this paper is to determine the functional characteristics of the labor markets of resource-type regions, to identify the features of their state. We used Rosstat data for 2005–2006, 2008, 2013, 2016–2019, as well as microdata from a sample labor force survey conducted by Rosstat in 2019. It is shown that the factor of resource dependence has some effect on the parameters of regional labor markets, but only in combination with other factors (climatic, demographic, spatial, structural and sectoral). In various regions the influence of this factors can be very different. The cluster analysis made it possible to identify some effects of the influence of the resource dependence on labor markets. Firstly, only a very high level of resource dependence of regions is accompanied by a positive and complex influence on regional labor markets. Secondly, resource dependence of regions provides labor market parameters at least at the national average. From the point of view of state regulation labor markets in regions with a high level of resource dependence deserve special attention. At the same time, the main area of activity should be efforts to diversify the economy at the expense of resource rent. This requires the development of new approaches to the interaction of regional authorities with mining companies based in resource-type regions.

Constrained public benefits from global catch share fisheries

Across publicly owned natural resources, the practice of recovering financial compensation, commonly known as resource rent, from extractive industries influences wealth distribution and general welfare of society. Catch shares are the primary approach adopted to diminish the economically wasteful race to fish by allocating shares of fish quotas—public assets—to selected fishing firms. It is perceived that resource rent is concentrated within catch share fisheries, but there has been no systematic comparison of rent-charging practices with other extractive industries. Here, we estimate the global prevalence of catch share fisheries and compare rent recovery mechanisms (RRM) in the fishing industry with other extractive industries. We show that while catch share fisheries harvest 17.4 million tons (19% of global fisheries landings), with a value of 17.7 billion USD (17% of global fisheries landed value), rent charges occurred in only 5 of 18 countries with shares of fish quotas primarily allocated free of charge. When compared with other extractive industries, fishing is the only industry that consistently lacks RRM. While recovering resource rent for harvesting well-governed fishery resources represents a source of revenue to coastal states, which could be sustained indefinitely, overcharging the industry might impact fish supply. Different RRM occurred in extractive industries, though generally, rent-based charges can help avoid affecting deployment of capital and labor to harvest fish since they depend on the profitability of the operations. Our study could be a starting point for coastal states to consider adapting policies to the enhanced economic condition of the fishing industry under catch shares.

Determinants of Electricity Production from Renewable Source Excluding Hydroelectricity in Selected East African Countries: Panel ARDL Approach

Though east Africa has ample resource endowments for electricity production, the region has the lowest performance in generating electricity and millions of people are living without access to electricity. To fill the electricity gap countries used fossil fuels as the major source of energy, but electricity production from renewable resource is lower. Therefore, this study aimed to identify determinant factors of electricity production from renewable resources excluding hydropower sources. Panel data for five east African countries for the period 1998 to 2019 was used and it was examined by pooled mean group panel ARDL estimation technique. The estimation result revealed that that in both long and short run GDP per capita growth, population growth, energy consumption per capita and energy import have positive significant effect on electricity production from renewable resources other than hydropower. While political instability, electricity production from hydropower, and electricity production from oil, gas, and coal have negative significant effect. However in the short run energy use and resource rent percentage of GDP have positive and negative significant effect respectively, but in the long run the two variables have no significant effect. Error correction coefficient is negative 0.64, which indicates that deviation from long run disequilibrium adjusts toward equilibrium at a rate of 64% per year. Based on the result this study recommends that the government should improve the performance of GDP growth by quality education, lower lending interest rate, improving political stability through controlling internal conflicts caused by difference in religion and ethnicity, improving energy security.