Net value royalties : Practical tool or economist's illusion?

The petroleum industry has traditionally generated substantial revenues for governments. Where governmental power is divided, as in federations like Canada and Australia, a junior level of government normally collects royalties while the senior level levies a variety of imposts (income tax, export duties, excises on production). The combination of recent sharp reductions in prices, more price volatility and an era of freer markets has subjected existing tax and royalty systems to severe strain and has shifted attention to the design of fiscal systems that are more profit- sensitive. For the royalty element, interest focuses on net value royalties (NVRs). This paper deals with the nature and problems of NVRs. It proceeds by looking first at the application of resource rent royalties in Australia. It then focuses on recent megaproject royalty arrangements in Alberta and evaluates the degree to which Alberta's current royalty system is profit- sensitive. Problems associated with NVRs are discussed in the fourth section; concluding remarks are made in the last section.     

Comparing petroleum fiscal regimes under oil price uncertainty

This study investigates and compares five upstream petroleum fiscal systems under crude oil price uncertainty. The fiscal systems analyzed are: the Alberta Canada tax and royalty system, the Papua New Guinea (PNG) (pre-2003) traditional Rate of Return (ROR) system, the Sao Tome and Principe/Nigerian Joint Development Zone (SNJDZ) Production Sharing Contract (PSC), the Tanzanian PSC/ROR hybrid system and the Trinidad and Tobago PSC. Contingent claims analysis is used to value the governments’ tax claims under uncertainty using a numerical approach, viz., Monte Carlo simulation. Each system is tested to obtain the after-tax value accruing to firms as well as the distortionary effects introduced by the fiscal systems. The results are then ranked. The Alberta Canada and PNG fiscal systems provide companies with the highest after-tax values while also being the least distortionary. The Tanzanian system is the lowest in both rankings, providing relatively low after-tax values and introducing strong distortionary effects. The SNJDZ PSC imposed a relatively high tax burden on companies with median distortionary effects. The Trinidadian PSC generated a median tax burden on companies but has strong distortionary effects.     

The dilemma of the mining royalty: contractual or realty interest

At common law, the legal nature of a mining royalty between private parties will decide the respective rights of payor and recipient. In some circumstances, it will also determine whether the interest of the recipient will prevail or may be lost and ignored. Industry practices, even those of long standing, that are contrary to the law will not change the law or its effect to meet such concerns. This paper looks at the development of the mining royalty between private parties in Canada and the effect of the realization by recipients that contractual royalties, as opposed to royalties that are interests in the lands or product to which they relate, can be lost in certain circumstances. Suggestions are made for some features that may assist in transforming an otherwise contractual royalty into a real property interest. Some of the concerns for both payor and recipient with respect to the implementation of such suggestions are also discussed.
The article has two appendices attached. Appendix A is an extract from an article by the author discussing the concept of payment of a royalty in kind which is relevant to such suggestions. Appendix B contains some of the more lengthy explanatory notes referred to in the text of the article.     

State mineral production taxes and mining law reform

Fuel and leasable minerals mined in the United States have historically been subject to federal royalties while locatable minerals have not. In recent years there have been multiple attempts to alter this policy and subject locatable minerals to federal royalties as well; most recently the preliminary 2012 Obama budget included a gross royalty on hard-rock mining on public lands. This paper analyzes the issue of imposing such federal royalties from both a legal and economic perspective. From a legal perspective, it is argued that the state of western property rights precludes royalties on currently extant claims so revenues from a royalty would not be realized for many years. From an economic perspective, it is argued that the effect on revenue would be smaller than one might anticipate due to such a royalty crowding out state levies or encouraging vertical disintegration on the part of mining firms to avoid much of the burden of the royalty.     

South African gold mining taxation : An example of a resource rent tax

Theoretically, a resource rent tax is neutral in that it does not influence the allocation of resources. However, the application of such fundamental principles in the tax formula of the South African gold mining industry negates the neutrality principle. A progressive element in the tax rate encourages mining of submarginal ores - leads to misallocation of resources. However, it substantially reduces the financial risks of a mining company engaged in the extraction of a commodity characterized by price volability, such as gold, and permits economies of scale in mining and encourages conservation of a non-renewable resource. As long as prices increase faster than costs, the advantages of this system probably exceed the disadvantages. The choice of the threshold rate in such a tax system is critical. If it is too high it will encourage mining of submarginal ores, and if too low it does not recognize the peculiar risks of gold mining investments.     

System dynamics model for analyzing effects of eco-design policy on packaging waste management system

EU's long-term objective is to become a recycling and resource effective society, where waste is utilized as a resource and waste generation is prevented. A system dynamics model was developed to analyze the policy mechanisms that promote packaging material efficiency in products through increased recycling rates. The model includes economic incentives such as packaging and landfill taxes combined with market mechanisms, behavioral aspects and ecological considerations in terms of material efficiency (the packaging material per product unit, recycled fraction in products). The paper presents the results of application of various policy instruments for increasing packaging material efficiency and recovery rate and reducing landfilled fraction. The results show that a packaging tax is an effective policy instrument for increasing the material efficiency. It ensures the decrease of the total consumption of materials and subsequent waste generation. The tax helps to counteract a rebound effect, which, as identified by the analysis, can be caused by reduced material costs due to eco-design. The model is applied to the case of Latvia. Yet, the elements and structure of the model developed are similar to waste management systems in many countries. By changing numeric values of certain parameters, the model can be applied to analyze policy mechanisms in other countries.     

Performance assessment of integrated energy systems for HVAC applications

In this article, energy and exergy analyses are conducted for two integrated systems which can be used in HVAC applications. These two systems are analyzed for the cases of single generation, cogeneration and trigeneration, and their performances are evaluated through energy and exergy efficiencies. The parametric studies are performed to investigate the effects of using cogeneration and extended to trigeneration on the system performance. To perform the comparisons between the systems for multiple options, the same amounts of outputs (in terms of electricity, heating, cooling) are produced for all systems. The energy analyses of systems 1 and 2 show a great benefit for moving from single generation to trigeneration, with the trigeneration efficiencies of 83.5% and 87.2%, respectively, and single generation efficiencies of 47% for both systems. However, the exergy analyses show that trigeneration may not always become more efficient than single generation, particularly for system 1, due to the fact that the trigeneration exergy efficiency is 38.7% and the corresponding single generation efficiency is 44.3%. For system 2, the trigeneration exergy efficiency is 52.7% while the single generation efficiency becomes 44.3%. Depending on the type of cogeneration or cogeneration design, the system can be more efficient.     

Packaging waste and the polluter pays principle: a taxation solution

Packaging waste has become a focus for attention by policy‐makers in a number of countries. This article offers a simple policy measure — a packaging tax or levy — which serves the required aims of policy, namely: reducing waste at source; increasing the rate of recycling; and consistency with the polluter pays principle. The tax is illustrated in the context of beverage containers in the UK and Japan. The merits of the proposal are its simplicity and flexibility. The article suggests that the relevant environmental damages are captured by waste disposal costs and litter. Other life cycle impacts, such as emissions from energy use, could be included but only if there are not more efficient ways of regulating them.     

Influence of organic loading on an anaerobic sequencing biofilm batch reactor (ASBBR) as a function of cycle period and wastewater concentration

The effect of organic loading on the performance of a mechanically stirred anaerobic sequencing biofilm batch reactor (ASBBR) has been investigated, by varying influent concentration and cycle period. For microbial immobilization 1-cm polyurethane foam cubes were used. An agitation rate of 500 rpm and temperature of 30+/-2 degrees C were employed. Organic loading rates (OLR) of 1.5-6.0gCODl(-1)d(-1) were applied to the 6.3-l reactor treating 2.0 l synthetic wastewater in 8 and 12-h batches and at concentrations of 500-2000mgCODl(-1), making it possible to analyze the effect of these two operation variables for the same organic loading range. Microbial immobilization on inert support maintained approximately 60 gTVS in the reactor. Filtered sample organic COD removal efficiencies ranged from 73 to 88% for organic loading up to 5.4gCODl(-1)d(-1). For higher organic loading (influent concentration of 2000mgCODl(-1) and 8-h cycle) the system presented total volatile acids accumulation, which reduced organics removal efficiency down to 55%. In this way, ASBBR with immobilized biomass was shown to be efficient for organic removal at organic loading rates of up to 5.4gCODl(-1)d(-1) and to be more stable to organic loading variations for 12-h cycles. This reactor might be an alternative to intermittent systems as it possesses greater operational flexibility. It might also be an alternative to batch systems suspended with microorganisms since it eliminates both the uncertainties regarding granulation and the time necessary for biomass sedimentation, hence reducing the total cycle period.     

Effect of tax laws on mineral exploration in Canada

Changes since 1972 in Canadian federal and provincial tax laws have eliminated many of the prior tax incentives offered to the mining industry. These changes provide an opportunity to study the effect of tax laws on a country's mineral resource development by comparing trends in mineral exploration in various provinces with adjoining regions, and by comparing these results with firm behaviour that would be expected from microeconomic analysis. Mineral producers have sought higher, more stable returns, resulting in shifts of exploration into political regions with more favourable and less changeable tax policies. Future supplies of mineral raw materials from a political region are dependent on current exploration effort, which is in turn influenced by the region's tax laws.     

Petroleum taxation in West Africa

The petroleum tax systems of nine West African countries are compared and analysed for their effectiveness in capturing the maximum amount of oil revenues. As a general rule, those countries which are major oil-exporting countries have the highest tax rates whereas those which are oil-importing countries have the lowest. The tax systems have changed over time, reflecting inter alia, changing national attitudes towards foreign investment, the price of oil and domestic needs. One conclusion reached is that many of the tax systems in place today are regressive in that the tax rates are fixed and are not adjusted to the profitability or non-profitability of the oil field .     

Policy Integration as a Success Factor for Emissions Trading

Emissions trading will not be able to become the single instrument of a national climate policy because of costs for monitoring of greenhouse gases and transfers of allowances. Thus, it is important to assess optimal ways of integrating emissions trading into national climate policy mixes, thus leading to a more efficient policy, especially by allowing the use of transboundary transactions. The implemented trading systems of the UK and Denmark, the agreed EU one, and the planned ones of Norway are used as case studies. In the UK, the introduction of an energy tax on industry was the catalyst that led to the development of emissions trading, voluntary agreements, and two subsidy programs. However, in Denmark trading was limited in scope and not integrated with the successful emission tax. The EU and Norwegian trading schemes both have a large scope and integrate international transfers; the former is integrated with other instruments to avoid free riding. Policy integration will thus enhance the efficiency improvements that emissions trading can introduce.     

Malaysia's tin supply problems

The sharp decline in Malaysia's tin output has become a matter of serious concern. The mining industry has blamed ‘penal’ tax rates for the decline in development, but more important in discouraging new investment and prospecting are difficulties in obtaining new mining leases, and the insecurity created by government plans to restructure asset ownership so as to increase indigenous Malay participation.     

The marginal cost of public funds of mineral and energy taxes in Peru

We estimate the Marginal Cost of Public Funds (MCPF) for Peru using a detailed computable general equilibrium (CGE) model. Revenues from all major sources (including taxes on factors of production, natural resources such as energy and minerals, consumption, and imports) are examined. Our focus is on the efficiency implications of mineral and energy taxes, given their importance to Peruvian public finance. The primary data are from the Global Trade Analysis Project (GTAP) as modified to include detailed tax information from the Peruvian Ministry of Economy and Finance and the Peruvian Internal Revenue Service. Consistent with the theories of public finance, we find that the MCPF is greater for activities that face high or widely varying tax rates. The taxes on energy and mineral activities represent a clear illustration of this relationship. The results presented in this paper indicate opportunities to improved efficiency in the current tax mix, and also indicate the financing costs of proposed expenditures that would be funded with taxes on energy and natural resources.     

基于环境保护的机动车税优化建议

当前区域性大气污染问题突出,机动车使用造成的污染问题不可忽视。为解决区域性的大气污染问题,机动车税费的污染减排调控功能日益被政府和学者重视。研究围绕"如何使机动车税更好发挥环境保护的效果"的问题,比较了中日机动车税的结构和性质,分析了在购买、保有和使用等不同环节的机动车税的特点以及环保效果,并基于问卷调查分析中国私家车主不同环节机动车税的负担情况。研究表明,在机动车使用环节征收的成品油消费税污染调控效果要优于其他环节的税收;对商业用途的机动车使用征税仅有收入功能没有调控功能,建议将机动车相关税的作用重心从购买环节转移到使用环节上,并对商业用途和私人用途的机动车实施差别税率。     

The Employment and Productivity Effects of Environmental Taxation: Additional Dividends or Added Distractions?

Claims of employment and productivity gains from environmental taxation are examined in the context of recent policy developments which have extended the traditional role of economic instruments in environmental regulation. Although the general existence of such spin-offs cannot be established, the debate has clarified guidelines for designing and implementing specific environmentally based taxes to help deliver sustainable development. Recent UK tax proposals have started to draw on the flexibility of fiscal instruments to tackle environmental problems. Innovations include earmarking taxes to fund allied spatial and sectoral programmes, recycling revenues to provide fiscally neutral improvements in tax efficiency and using taxation to help promote eco-efficiency.     

Petroleum exploitation and contract terms in developing countries after the oil price collapse

In resource taxation the critical fiscal requirement is a scheme which performs the twin functions of ensuring that projects which are viable on a pre-tax basis remain so post-tax, and that the host government obtains a reasonable share of the economic rent. Royalty, income tax, production-sharing and the resource rent tax are examined in the light of their efficiency at meeting these two criteria. The resource rent tax is probably the most appropriate fiscal instrument because this tax permits a threshold rate of return to be earned before the tax becomes payable. One drawback is that during the early years of a project the host government may receive little or no revenue. An advance resource rent tax can be used to eliminate this shortcoming. A further problem is the disincentive to exploration which can be produced.     

Preliminary evaluation of septic-system absorption-field architecture types in a profile-limited soil

Managing household wastewater is an issue that affects hundreds of thousands of people in rural communities nationwide, many of whom rely on septic systems as their primary means of household wastewater disposal. Septic system absorption field products with architectures quite different from traditional pipe-and-gravel systems are being installed in many states with variances from initial design specifications. The objective of this study was to evaluate the performance, as measured by the in-product height of stored solution, of four differing absorption-field product architecture types in a profile-limited soil that was loaded at the maximum allowable rate based on soil morphology. Five chamber, two gravel-less pipe, two polystyrene aggregate, and four pipe-and-gravel systems were installed in a profile-limited, Captina silt loam soil (fine-silty, siliceous, active, mesic Typic Fragiudult) and dosed with raw effluent at rates determined by current State of Arkansas regulations via individual peristaltic pumps. Free-solution monitoring ports were installed within each product, where the depth to free solution was measured periodically and used to evaluate product performance. Data collected from January through August 2009 indicated that preliminary system performance was unaffected by product architecture type. All products performed similarly under dry soil conditions. However, differences among individual products were observed during periods of hydrologic stress (i.e., wet soil conditions). Surfacing of effluent was not observed atop any product, indicating that the current loading rate design method is functioning properly. Preliminary results indicate that some alternative absorption-field products perform similarly to the traditional pipe-and-gravel system, thus providing flexibility and options for homeowners.     

我国生态环境财税政策历史变迁及优化建议

本文系统回顾了新中国成立70年以来生态环境财税政策的历史变迁,以时间为主线,分析其在不同阶段的措施手段,对于制定完善生态环境财税政策,全面推进美丽中国建设具有重大意义。生态环境财税政策大致经历了萌芽发展、探索发展、开拓发展和快速发展四个阶段,从无到有,逐步演化,已形成种类齐全,内容丰富的政策体系,但同时也存在着支出力度和支出效率不足、事权与支出责任相适应的制度不明确、税收政策体系尚不完善等问题。本文提出了增加财政"211节能环保"科目支出规模、健全事权与支出责任相匹配的财政制度、完善环境保护税和税收优惠政策、建立基于绩效的资金分配机制等优化新时期生态环境财税政策的建议。     

Bolivia's strategy for restructuring the state's mining sector and promoting private investment in mining

Bolivia is a country of great mineral wealth with known reserves estimated to be worth over US$7 billion. Despite this great potential wealth, in the early 1980s the mining industry of Bolivia found itself in a crisis characterized by excessive state intervention in the industry, a financially troubled state mining company, large areas of the country off-limits to mineral development, an irrational tax system which discouraged mining and labour unrest. To deal with these problems, the government decided to restructure the mining industry so as to encourage private participation. This paper describes the policies introduced to revitalize the mining industry as well as projections of what the future benefits would be to the country if those policies are successful in achieving their objectives.