Cahier 15-2013 The Taxation of Nonrenewable Natural Resources Cahier 15-2013 The Taxation of Nonrenewable Natural Resources The taxation of nonrenewable natural resources 1

Le Centre interuniversitaire de recherche en économie quantitative (CIREQ) regroupe des chercheurs dans les domaines de l'économétrie, la théorie de la décision, la macroéconomie et les marchés financiers, la microéconomie appliquée ainsi que l'économie de l'environnement et des ressources naturelles. Cahier 15-2013 The Taxation of Nonrenewable Natural Resources Gérard GAUDET and Pierre LASSERRE Ce cahier a également été publié par le Département de sciences économiques de l'Université de Montréal sous le numéro (2013-10). This working paper was also published by the Department of Economics of the University of Montreal under number (2013-10). Abstract We provide an analytical overview of the distortionary effects of some common forms of taxes faced by the nonrenewable resources sector of the economy. In the category of taxes meant specifically to capture the resource rent, we look at a specific severance tax, an ad valorem severance tax, a profit tax and a "lump-sum" tax, with emphasis on their effects on the extraction decisions over time and on the initial reserves to be developed. In the category of taxes meant for all sectors of the economy, we look at the corporate income tax and its special provision for the resource sector in the form of a depletion allowance, with emphasis on the effects on the intra-industry resource extraction decisions and on the inter-industry allocation of investment