The Impact of Tax Concessions on Extraction of Non-renewable Resources:An Application to Gold Mining in Tanzania

Amos Ibrahim-Shwilima () and Hideki Konishi ()
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Amos Ibrahim-Shwilima: Graduate School of Economics, Waseda University
Hideki Konishi: School of Political Science and Economics, Waseda University

No 1403, Working Papers from Waseda University, Faculty of Political Science and Economics

Abstract: Gold mining firms in Tanzania pay royalty and corporate taxes, but also receive many tax concessions. Such tax incentives may cause to reschedule their extraction plans and thereby change the expected life of a gold mine. We model a representative mining firm's extraction decision using optimal control theory, into which various tax incentives are introduced to determine their theoretical impact. Our results suggest thatin the race to take advantage of tax incentives, a firm may end up making excessive investments, which in turn increases extraction rate. Actual extraction patterns of several gold mining companies in Tanzania are also reviewed.

Keywords: Natural resources; tax incentives; corporate tax policy (search for similar items in EconPapers)
JEL-codes: H25 Q38 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2014-05
New Economics Papers: this item is included in nep-afr and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:wap:wpaper:1403

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