Abstract
Setting an optimal fiscal policy in oil-producing countries is challenging, due to the exhaustibility of oil resources and unpredictability of oil prices. Recently it has become popular among oil-producing countries to establish oil revenue funds, which are believed to stabilize the economy and provide inter-generational redistribution of oil wealth. The effectiveness of oil revenue funds and their design have received considerable attention from researchers and policymakers recently. Using empirical model, it is found that an oil revenue fund in Kazakhstan stabilized the government expenditure, but did not stabilize real effective exchange rates.
Highlights
The following payments must be deposited in the National Fund according to the President of the Republic of Kazakhstan (2001, 2005, 2010): corporate income tax, excess profit tax and rent tax on oil and gas exports, bonuses, royalties, production share, additional payments according to production sharing agreements, fines and penalties paid by selected petroleum sector corporations, proceeds from the privatization of state property in the mining and manufacturing sectors, proceeds from sales of agricultural land and investment income of the Fund
Where reert is a log of the real effective exchange rate and x are explanatory variables which are a rate of a value-added tax in Kazakhstan, a rate of tax on oil exports in Kazakhstan, dummy variables indication periods when significant changes were applied in the taxation of oil in 2004, and when significant changes were applied in the taxation of oil in 2009, a log of the real value of oil production, its interaction terms with dummy variables indicating periods over which fund
This paper provides empirical evidence of the effect of fiscal policy on the National fund’s revenue, gross international reserves, REER and government expenditure in Kazakhstan
Summary
Research on the taxation of oil for most oil-producing countries, such as the OPEC nations, the Gulf countries, Mexico, Norway, UK, and the USA, is abundant. Unlike previous paper and similar to the current paper, Burness (1976) considers the effect of resource taxation on production, assuming a lifetime of reserves as an endogenous variable in order to show how taxation of oil affects this variable For this reason, the author uses a dynamic optimization method. The model of Heaps and Helliwell (1985) shows the effect of different types of taxes, such as per unit taxes, net profit taxes, a license fee, property taxes, and resource rent taxes, on production choice. To the best of our knowledge, there is no theoretical model showing the effect of price-dependent ad valorem taxes on oil production and oil exploration assuming variable oil prices
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