Issues in Australasian Mining Taxation: The Arguments for and Against Resource Rent Taxation


Resource rent taxation systems are based on the concept that the resource owner or government should receive a proportion of the economic rent or surplus profit generated by a primary productive activity. Economic rent has been defined as additional profits in excess of the minimum rate of return necessary to attract new investment into an industry sector. Resource rent taxation schemes for the mining industry have been widely discussed and in some cases implemented over the past 20 years. The main objective of resource rent taxation has been to implement a royalty or taxation system which gives to government a higher return from more profitable mines without adversely affecting marginal mines or inhibiting investment in new mines. The structure of resource rent taxation systems is discussed, with particular emphasis on the parameters of accumulator rate, tax or royalty rate and deductible expenses. The application of the tax is examined by looking at the case in favour for imposition from the viewpoint of the Resource Owner (government) and the mine operator. Likewise, the case against this system is analysed from the tax collector's (government or governments) point of view and that of the mine operator. It is concluded that neutrality of the tax on investment decision-making may be compromised when the possible negative effects on exploration and research and development and their impact on overall mining company performance are considered. Any application of the tax on existing operations is likely to be complex and costly for both governments and companies. However, successful application to green-fields developments has been demonstrated in Papua New Guinea.


Mining Engineering

Keywords and Phrases

Coal Mines; Economic Rent; Resource Rent Taxation Systems

International Standard Serial Number (ISSN)


Document Type

Article - Journal

Document Version


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© 1994 Australasian Institute of Mining and Metallurgy (AusIMM), All rights reserved.

Publication Date

01 Jul 1994

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