Taxing Choices for Managing Natural Resources, the Environment, and Global Climate Change: Fiscal Systems Reform Perspectives

About This Book
Contents
Notes on Contributors
List of Figures
List of Tables
Part I Introduction and Overview
1 Overview
Part II The Taxation of Natural Resources and the Environment, Revenue Sharing and Revenue Fund Management
2 The Taxation of Natural Resources: Principles and Policy Issues
2.1 Introduction
2.2 The Goals of Resource Taxation
2.2.1 The Concept of Resource Rents
2.2.1.1 Non-Renewable Resource Rents
2.2.1.2 Renewable Resource Rents
2.2.2 Reasons for Taxing Resource Industries
2.2.2.1 Rent Collection
2.2.2.2 Capital Income Taxation
2.2.2.3 Industrial Policy
2.2.2.4 Risk Pooling and Financing
2.2.2.5 The Taxation of Foreigners
2.2.2.6 Exercise Monopoly Powers in World Markets
2.2.2.7 Conservation of Resources
2.3 Principles of Taxing Resource Rents
2.3.1 Some General Issues
2.3.1.1 Ex Ante Versus Ex Post Rent Taxation
2.3.1.2 Problems of Measuring Rents
2.3.1.3 Monitoring and Implementation Problems
2.3.1.4 Relation with Other Taxes
2.3.1.5 Absence of Loss Offsetting and Uncertainty
2.3.1.6 Treatment of Foreign Income
2.3.2 Some Equivalent Ways of Measuring Rents
2.3.2.1 Economic Rents
2.3.3 Cash Flow
2.3.3.1 Cash Flow Equivalent
2.3.4 Rent-Maximizing Decision Rules
2.3.4.1 Non-Renewable Resources
2.3.4.2 Renewable Resources
2.3.4.3 Inventories
2.3.5 Mechanisms for Taxation of Resource Rents
2.3.5.1 Auctions
2.3.5.2 Cash Flow and Cash Flow Equivalent Taxation
2.3.5.3 Royalties
2.3.5.4 Production Sharing and Public Sector Equity Participation
2.4 The Costs of Imperfect Rent Taxes
2.4.1 Introduction
2.4.2 Decisions Affected by Rent Taxes
2.4.3 Royalty Structures
2.4.4 Export Taxes
2.4.5 Concessions and Leasing Arrangements
2.4.6 Measuring the Distorting Effect of Taxes
2.5 Policy Implications
2.5.1 Introduction
2.5.2 Policies for Capturing Resource Rents
2.5.2.1 Cash Flow or Cash Flow Equivalent Taxes
2.5.2.2 Auctioning of Leases or Property Rights
2.5.2.3 Public Sector Equity Participation
2.5.3 How Actual Policies Differ from True Rent Collection Devices
2.5.3.1 Tax Measures
2.5.3.2 Auction Systems
2.5.3.3 Production Sharing
2.5.3.4 Equity Participation
2.5.4 Other Design Issues
2.5.5 Conclusion
Appendix: Measuring Marginal Effective Tax Rates in Resource Industries
Suggested Readings
3 Green Taxes and Policies for Environmental Protection
3.1 Introduction
3.2 The Foundations of Environmental Policy
3.2.1 Rationale for Public Policies: Missing Markets
3.2.2 The Role of Government Policies
3.2.3 Pigouvian Taxes for Environmental Control
3.3 Possible Environmental Policy Instruments
3.3.1 Assignment of Relevant Property Rights
3.3.2 Marketable Pollution Quotas
3.3.3 Indirect Taxes on Inputs and Outputs
3.3.4 Effluent and Emissions Charges
3.3.5 Content Taxes
3.3.6 Emission (Abatement) Standards
3.3.7 Abatement Technology Standards
3.4 Criteria for Comparing Policy Instruments
3.4.1 Level of Control by Regulators and Flexibility Offered Polluters
3.4.2 Monitoring and Enforcing Compliance
3.4.3 Incentives for Innovation in Pollution Abatement Technology
3.4.4 Fiscal Policy Objectives
3.5 Welfare Analysis of Environmental Policy Instruments
3.5.1 The Equivalence Information of Different Instruments with Perfect Information
3.5.2 Comparative Advantage of Policy Instruments Under Uncertainty
3.5.3 Enforcement Considerations
3.5.4 Constraints on Environmental Policy in Developing Countries
3.5.5 The Efficiency Value of Environmental Taxation in Developing Countries
3.5.6 Environmental Regulation and Pre-Existing Market Distortions
3.6 A Few Specific Policy Recommendations
References
4 Revenue Sharing from Natural Resources: Principles and Practices
4.1 Introduction
4.2 Resource Revenue Assignment and Sharing—Basic Considerations
4.2.1 Resource Tax Assignment
4.2.2 Resource Revenue Sharing
4.2.2.1 Sharing of Resource Revenues—A Summary of Basic Considerations
4.3 Resource Revenue Sharing—Practices
4.3.1 No Revenue Sharing (Centralized Arrangements or Full Central Government Control over Resource Revenues)
4.3.2 Central and Central/Provincial Government Tax-by-Tax Sharing Programs—Top-Down Tax Sharing (Centralized or Negotiated Sharing Arrangements)
4.3.3 General Revenue Sharing
4.3.4 Mostly, Provincial Control with No Revenue Sharing (Resource Revenues Primarily Accrue to States/Provinces but the Federal Governments Share the Tax Base for Corporate Income)
4.3.5 Full Provincial Control over Resource Revenues Accompanied by Bottom-Up Revenue Sharing (Provinces/States Contribute a Bilaterally Negotiated Share to the Federal Government)
4.4 A Brief Discussion of Resource Revenue Sharing Practices
4.5 Some Conclusions
4.6 Lessons
References
5 Non-renewable Resource Revenue Funds: Critical Issues in Design and Management
5.1 Introduction
5.2 Selected Examples of Natural Resources Revenue Funds (NRRFs)
5.2.1 Industrial Country Examples
5.2.1.1 Norway: Government Pension Fund Global
5.2.1.2 USA State of Alaska Permanent Fund
5.2.1.3 Alberta Heritage Fund
5.2.2 Transition Economies Examples
5.2.2.1 State Oil Fund of Azerbaijan Republic
5.2.2.2 National Fund of the Republic of Kazakhstan
5.3 National Resource Revenue Funds: Are They Effective?
5.4 Key Considerations in Designing Natural Resources Revenue Funds
5.4.1 Fund Governance
5.4.2 Inflow Rules
5.4.3 Outflow Rules
5.5 Conclusions
References
Part III Environmental Federalism
6 Green Federalism: Principles and Practice in Mature Federations and the European Union
6.1 Introduction
6.2 Conceptual Underpinnings of Assignment of Environmental Functions
6.2.1 Fiscal Federalism Literature
6.2.1.1 Federalism Principles and a Stylized Assignment of Environmental Functions
6.2.1.2 Oates’ Conceptual Framework for Allocation of Environmental Functions
6.2.1.3 Issues Arising from the Implementation of the Oates’ Conceptual Framework
6.2.2 Public Choice and Political Economy Perspectives
6.2.3 Organizational Theory and Neo-Institutional Economics Perspectives
6.3 A Comparative Perspective on the Assignment of Functions in Practice
6.3.1 Australia
6.3.2 Canada
6.3.3 Germany
6.3.4 USA
6.3.5 The European Union
6.3.6 Comparative Perspectives
6.4 Lessons
References
7 Environmental Federalism in Brazil
7.1 Introduction
7.2 Constitutional Assignment of Environmental Functions
7.3 Specification of Assignments
7.4 The System in Practice
7.4.1 De Facto Assignment of Responsibilities
7.4.2 How Well the System Works to Protect the Environment?
7.4.3 Is There a “Race to the Bottom”?
7.5 The Judicial and Legal System
7.5.1 Role of Courts
7.5.2 Protections Laid Out in the Constitution
7.6 Political Issues and Impact on Environmental Standards
7.6.1 Influence of Political Party Competition
7.6.2 Impact of Societal Consensus on Environmental Standards
7.7 International Agreements and Implications for Environmental Federalism
7.7.1 The Convention on Biological Diversity (CBD)
7.7.2 The Convention on Climate Change
7.7.3 The Convention to Combat Desertification
7.7.4 Agenda 21
7.7.5 Sustainable Development Goals
7.8 Has Environmental Federalism Contributed to Policies for Sustainable Management of the Environment and Natural Resources?
7.9 Conclusions
Bibliography
Part IV Combating Global Climate Change
8 Carbon Tax as a Tool for Tax Reform and Protecting Local and Global Environments
8.1 Introduction
8.1.1 The Problem and the Status of Policy Discussions
8.2 Global Carbon Taxes: Potentials and Perils
8.3 Economics of a National Carbon Tax
8.3.1 Revenue Potential of Carbon Taxes
8.3.2 Distributional Implications of Carbon Taxes
8.3.3 Comparison with the Incidence of Personal and Corporate Income Taxes
8.3.4 Efficiency Costs of Carbon Taxes
8.4 The Impact of Carbon Taxes on Greenhouse Gases and Local Pollutants
8.5 Carbon Taxes, Industrial Performance and Economic Growth
8.6 Tradeable Permits
8.7 Summary and Conclusions
8.8 Appendix: Measurement of Differential Welfare Costs of Carbon Taxes
8.9 Case A: Welfare Costs of Carbon Taxes That Displace Equal Yield Personal Income Taxes
8.10 Case B: Welfare Costs of Carbon Taxes That Displace Equal Yield Corporate Income Taxes
8.11 Case C: Welfare Costs of a Revenue Enhancing Carbon Tax with No Change in Existing Taxes
8.12 Case D: Welfare Effects of a Revenue Enhancing Carbon Tax with No Change in Existing Taxes but Accounting for Subsidies
References
9 Worldwide Energy Subsidies and the Impact of Their Removal on Economic Welfare and Global Climate Change
9.1 Introduction
9.2 Existing Fossil Fuel Pricing Regimes and World Energy Subsidies
9.3 Implications for Greenhouse Gas Emissions
9.3.1 No World Price Effects
9.3.2 World Price Effects
9.4 Welfare Costs of Fossil Fuel Subsidies
9.5 Potential Foreign Inducement for Removal of Subsidies
9.6 Summary and Conclusions
Annex
References
Part V Combating Corruption
10 Combating Corruption in the Oil and Gas Sector
10.1 Introduction
10.2 Corruption and Its Drivers: Fundamental Concepts
10.2.1 Fundamental Concepts
10.2.2 The Many Forms of Corruption in Oil and Gas Industry
10.2.3 Many Facets of Corruption in the Oil and Gas Sector
10.3 What Drives Corruption? Conceptual Perspectives
10.3.1 Principal-Agent Models
10.3.2 New Public Management Frameworks
10.3.3 Neo-Institutional Economics (NIE) Frameworks
10.3.4 Measuring the Incidence of Corruption
10.4 What Is Special About Corruption in the Oil and Gas Sector
10.5 Global Initiatives in Combating Corruption in Oil and Gas Industry
10.5.1 Fiscal Transparency Code by the IMF
10.5.2 Extractive Industries Transparency Initiative (EITI)
10.5.3 Publish What You Pay (PWYP) Initiative
10.5.4 USA Foreign Corrupt Practices Act (FCPA)
10.6 The Way Forward: Pathways to Reform
References
Author Index
Subject Index