Over the last decade governments have given increasing attention to the taxation of petroleum production. The large increases in crude oil prices in 1973–4 and later in 1979–80 focused their attention on the large profits that could be made from this activity. Rates of taxation have now reached extremely high levels. In several countries oil companies have complained that the burden has become excessive and is impairing exploration and development. The economic rents emanating from oil extraction are widely regarded as a suitable base for taxation but there is a danger that over-zealous governments will impose burdens that exceed these rents and thus cause disincentives and distortions. The dangers of this occurring are increased under most conventional systems of taxation which are not specially designed to capture economic rents. Under conventional systems of taxation when marginal rates reach very high levels the dangers of such distortions and anomalies are further increased.
|Title of host publication||Risk and the Political Economy of Resource Development|
|Editors||David W Pearce, Horst Siebert, Ingo Walter|
|Number of pages||27|
|Publication status||Published - 3 Jan 2016|