Mining Taxation in Colombia

This paper first assesses the current Colombian mining tax-and-royalty regime in comparison with other countries from the points of view of efficiency, competitiveness and revenue performance. It then discusses the theoretical convenience of introducing alternative designs for a resource rent tax (RRT) to be applied to new mining projects, together with a reduced common royalty rate for all minerals, and simulates their potential efficiency, competitiveness and revenue-performance effects. In particular, it examines alternative interactions between the RRT, the royalty regime and the corporate income tax (royalties creditable against the RRT or deductible from its tax base; accepting or not corporate income tax deductibility from the RRT tax base), under alternative RRT tax rates. It also discusses alternative capital return allowances and the pros and cons of project-by-project versus sectorial ring fencing, and sharing RRT revenues between the national and sub-national governments. It concludes with a detailed blueprint for reform based on these discussions, assessments and simulations, as well as political economy and administrative considerations for the specific case of Colombia.Este trabajo evalúa la eficiencia, competitividad y capacidad de recaudo del régimen tributario y de regalías colombiano en comparación con el de otros países mineros relevantes. Posteriormente, propone la implementación de un “Resource Rent Tax” (RRT) para proyectos mineros futuros (junto con una reducción y unificación de la tasa de regalías entre minerales) y modela el impacto que tendría éste sobre la eficiencia y el recaudo. Se examinan la interacción entre el RRT, las regalías y el impuesto de renta bajo distintos diseños y tasas de RRT y costo de oportunidad del capital. También se analiza si es preferible tener “ringfencing” a nivel de proyecto o a nivel sectorial. El trabajo concluye con una propuesta de reforma junto con consideraciones administrativas y políticas para una exitosa implementación

Macroeconomic aspects of Spanish American independence : the effects of fiscal and currency fragmentation, 1800s-1860s.

Economic historians explaining the divergent economic path in North and South America over time focus on the post-independence period in the former British or Spanish colonies. Their institutional explanation for Latin American economic backwardness is anchored in the political disorder that occurred in the postcolonial period, which did not provide the right conditions for economic growth. Yet, more important than political aspects, fiscal and monetary fragmentation of the Spanish Empire were major factors in hindering the economic growth later in the 19th century. This paper argues that economic struggle over resources determined political outcomes rather than the other way round. By assessing the macroeconomic effects of Independence on the contemporary and further economic and political development it shows that comparisons with North America are ill conceived. The study focuses on the disintegration of colonial fiscal and monetary regimes, that had organised the economy around silver mining and the export of silver currency as fiscal revenues, and the subsequent transformation into export-led economies, specialised in producing raw materials and foodstuff

MACROECONOMIC ASPECTS OF SPANISH AMERICAN INDEPENDENCE. The effects of Fiscal and Currency Fragmentation, 1800s-1860s

Economic historians explaining the divergent economic path in North and South America over time focus on the post-independence period in the former British or Spanish colonies. Their institutional explanation for Latin American economic backwardness is anchored in the political disorder that occurred in the postcolonial period, which did not provide the right conditions for economic growth. Yet, more important than political aspects, fiscal and monetary fragmentation of the Spanish Empire were major factors in hindering the economic growth later in the 19th century. This paper argues that economic struggle over resources determined political outcomes rather than the other way round. By assessing the macroeconomic effects of Independence on the contemporary and further economic and political development it shows that comparisons with North America are ill conceived. The study focuses on the disintegration of colonial fiscal and monetary regimes, that had organised the economy around silver mining and the export of silver currency as fiscal revenues, and the subsequent transformation into export-led economies, specialised in producing raw materials and foodstuff.

Distribution of mineral extraction revenue: overview of international practice

Purpose. To study basic principles and conditions of the efficiency of the system to redistribute mineral extraction revenue including the countries with lower levels of welfare. Methods. The research applies a method of qualitative and quantitative analysis of the scientific literature, data by the Natural Resource Governance Institute, national reports according to the Extractive Industries Transparency Initiative, and open Internet sources. Taxation schemes for mineral extraction revenue as well as the most important tendencies in the schemes changes over the recent years were considered. Distributions of the resource taxes in terms of the state administration levels as well as vertical distribution of budget receipts from the development of natural resources were analyzed. The countries distributing tax receipts from the mineral extraction in favour of the local authorities were selected as the object of the research. Findings. It has been determined that in the majority of countries, payments from mineral extraction are sent to the national-level institutions being distributed back to the mining areas or neighbouring territories. It has been pointed out that certain countries send a share of the mining income to the local budgets automatically using the formulas based on the objective indicators such as amount of population, amount of budget receipts from the area, poverty rate or geographical position. It has been identified that the basic principle of the system of resource use taxation to provide social welfare is represented by the optimal taxation scheme stimulating the production and maximizing the income which share is redistributed in favour of the society to cover all the local administration levels. Originality. The comparative analysis and determination of the recent data of distribution of budget receipts from mineral resources in terms of the developing countries. Practical implications. The obtained results may favour the scientific substantiation of the strategy to distribute mineral extraction revenue, planning of the development of mineral and raw material complex of the Central Asian countries; moreover, they may be useful while assessing the efficiency of investment projects of the field development.Мета. Вивчення основних принципів та умов ефективності системи перерозподілу доходів від видобутку корисних копалин, у тому числі в країнах з невисоким рівнем добробуту. Методика. У дослідженні використаний метод якісного та кількісного аналізу наукової літератури, даних Інституту управління природними ресурсами (Natural Resource Governance Institute (NRGI)), національних звітів за стандартом Ініціативи прозорості видобувних галузей (Extractive Industries Transparency Initiative, ІПДО), відкритих джерел у мережі Інтернет. Розглядалися режими оподаткування доходів від видобутку корисних копалин і найбільш їх важливі тенденції протягом останніх років. Досліджувався розподіл податків на корисні копалини за рівнями державного управління, а також вертикального розподілу бюджетних надходжень від природних ресурсів. Як об’єкт дослідження обрані країни, що розподіляють податкові надходження від видобувних галузей на користь органів місцевого самоврядування. Результати. Встановлено, що для більшості країн платежі від видобутку корисних копалин надходять до інститутів загальнонаціонального рівня, однак розподіляються назад на місця видобутку або в довколишні райони. Відзначено, що деякі країни передають частину з доходів від видобувних галузей до місцевих бюджетів автоматично, використовуючи формули, що базуються на об’єктивних індикаторах, таких як кількість населення, обсяги бюджетних надходжень з території, рівень бідності або географічне положення. Виявлено, що основним принципом системи оподаткування використання ресурсів для забезпечення суспільного добробуту є встановлення оптимального режиму оподаткування, що залишає стимули до виробництва і, в той же час, максимізує дохід, частина якого перерозподіляється на користь суспільства між усіма місцевими рівнями управління. Наукова новизна полягає у порівняльному аналізі та виявленні особливостей новітніх даних розподілу бюджетних надходжень від природних ресурсів на прикладі країн, що розвиваються. Практична значимість. Результати можуть сприяти науковому обґрунтуванню стратегії розподілу доходів від видобутку корисних копалин, плануванню розвитку мінерально-сировинного комплексу країн Середньої Азії, а також можуть бути корисними при оцінці ефективності інвестиційних проектів освоєння родовищ корисних копалин.Цель. Изучение основных принципов и условий эффективности системы перераспределения доходов от добычи полезных ископаемых, в том числе в странах с невысоким уровнем благосостояния. Методика. В исследовании использован метод качественного и количественного анализа научной литературы, данных Института управления природными ресурсами (Natural Resource Governance Institute (NRGI)), национальных отчетов по стандарту Инициативы прозрачности добывающих отраслей (Extractive Industries Transparency Initiative (ИПДО)), открытых источников в сети Интернет. Рассматривались режимы налогообложения доходов от добычи полезных ископаемых и наиболее их важные тенденции на протяжении последних лет. Исследовалось распределения налогов на полезные ископаемые по уровням государственного управления, а также вертикального распределения бюджетных поступлений от природных ресурсов. В качестве объекта исследования выбраны страны, которые распределяют налоговые поступления от добывающих отраслей в пользу органов местного самоуправления. Результаты. Установлено, что для большинства стран платежи от добычи полезных ископаемых поступают в институты общенационального уровня, однако распределяются обратно на места добычи или в близлежащие районы. Отмечено, что некоторые страны передают часть с доходов от добывающих отраслей в местные бюджеты автоматически, используя формулы, которые базируются на объективных индикаторах, таких как количество населения, объемы бюджетных поступлений с территории, уровень бедности или географическое положение. Выявлено, что основным принципом системы налогообложения использования ресурсов для обеспечения общественного благосостояния является установление оптимального режима налогообложения, что оставляет стимулы к производству и, в то же время, максимизирует доход, часть которого перераспределяется в пользу общества между всеми местными уровнями управления. Научная новизна заключается в сравнительном анализе и выявлении особенностей новейших данных распределения бюджетных поступлений от природных ресурсов на примере развивающихся стран. Практическая значимость. Результаты могут способствовать научному обоснованию стратегии распределения доходов от добычи полезных ископаемых, планированию развития минерально-сырьевого комплекса стран Средней Азии, а также могут быть полезны при оценке эффективности инвестиционных проектов освоения месторождений полезных ископаемых.The authors are grateful for the support in conducting the research to Moscow Automobile and Road Construction State Technical University (MADI), Moscow Metropolitan Governance University (MMGU), Plekhanov Russian University of Economics, and MIREA – Russian Technological University Institute of Educational Technologies and Humanities

Market-based Instruments for Environmental Policymaking in Latin America and the Caribbean: Lessons from Eleven Countries

This report is a summary of country studies in Latin America and the Caribbean, addressing the use of market-based instruments (MBIs) and command-and-control (CAC) measures for environmental management in the region. Even though MBIs can significantly add efficiency to existing CAC mechanisms, the scope of MBIs should match the countries institutional capacity to implement them. Gradual and flexible reforms are likely to succeed within the current regional context of continued institutional changes. A key function of MBIs is usually revenue collection, though it does not necessarily lead to successful environmental management. The study suggests that revenues should be channeled to local authorities for an effective MBI's implementation. The report also critiques the regular practice of international donor agencies in recommending the solutions suitable for developed countries, without considering the institutional conditions in developing countries. Further, the study explores both the successes and difficulties experienced in the region regarding regulations, macro-policies, and MBIs; the institutional frameworks of the countries under review; and, the issues considered in the design of MBIs, in order to promote a beneficial dialogue among them

Productivity Trends in the Coal Mining Industry in Canada

The purpose of this report is to uncover the factors behind what has been a very strong productivity performance from the coal mining industry in Canada over the past four decades. It is found that real price movements have had a substantial impact on productivity growth in the coal mining industry in Canada. The real price of coal increased sharply in the 1970s due to higher demand caused by the oil price shock. This increased the profitability of sites of marginal quality and thereby lead to operations on less productive sites than those in production at that point. This had the effect of lowering the average productivity of the overall industry. However, since the 1970s, the real price of coal has fallen steadily, reversing this effect and hence contributing to the high productivity growth of the 1980s and 1990s. Another factor in this impressive productivity performance, at least in the 1980s, was the gradual closing of underground coal mines and the concentration of production on open surface mines. Surface mines typically have higher levels of labour productivity than underground mines, so this effect reinforced the price effect in increasing the average productivity of the industry. The 1990s saw the computerization of several stages of the production process, from site planning to extraction. Despite having the image of an old-fashioned industry, the coal mining industry in Canada is actually among the most intensive users of advanced technologies, and this certainly appears to have contributed to the industry’s strong productivity performance as well.Coal Mining, Coal Industry, Mining, Mining Industry, Canada, Productivity, Productivity Growth

Colonial independence and economic backwardness in Latin America.

This paper explores the connections between independence from Spain and Portugal and economic backwardness in Latin America. The release of the fiscal burden was offset by higher costs of self-government, while opening up to the international economy represented a handmaiden of growth. Independence had a very different impact across regions and widened regional disparities. The commitment to the colonial mercantilism conditioned the new republics' performance but, on the whole, GDP per head increased in the half a century after emancipation. It appears that inherited Iberian institutions cannot be blamed for Latin America's poor performance relative to the US, especially if the scope is widened to include the post-independence performance of former European colonies in Africa and Asia. It is suggested that before jumping to the usual negative assessment of nineteenth century Latin America, a comparison of post-independence performance in other world regions will be required

COLONIAL INDEPENDENCE AND ECONOMIC BACKWARDNESS IN LATIN AMERICA

This paper explores the connections between independence from Spain and Portugal and economic backwardness in Latin America. The release of the fiscal burden was offset by higher costs of self-government, while opening up to the international economy represented a handmaiden of growth. Independence had a very different impact across regions and widened regional disparities. The commitment to the colonial mercantilism conditioned the new republics’ performance but, on the whole, GDP per head increased in the half a century after emancipation. It appears that inherited Iberian institutions cannot be blamed for Latin America’s poor performance relative to the US, especially if the scope is widened to include the post-independence performance of former European colonies in Africa and Asia. It is suggested that before jumping to the usual negative assessment of nineteenth century Latin America, a comparison of post-independence performance in other world regions will be required.