Oil Tax Research Articles

System Dynamics Modeling and Analysis of New Mexico Oil Production and Taxation

AbstractWe develop and use a system dynamics model of New Mexico Oil Production and Taxation (NMOPT) to explore the potential impact of exogenous and endogenous oil taxation on the level and stability of state revenue. Endogenous policies determine taxes based on internal dynamics (e.g., production value), whereas exogenous policies are independent of internal dynamics. We examine two exogenous and two endogenous (progressive and regressive) policies. Progressive taxation increases tax rates as production or price increases. Regressive taxation decreases tax rate as production or price increases. Our historical analysis indicates that New Mexico follows non-progressive (exogenous or regressive) taxation. However, our model’s Monte Carlo simulations reveal that transitioning to an exogenous fixed-rate taxation can substantially enhance the level and stability of the state’s revenues. The state can increase its revenue even further by adopting progressive taxation, which could also be considered an environmental policy, as it limits oil production. However, progressive taxation’s benefits come at the expense of higher revenue volatility. This paper also has two computational contributions: (1) a new intergenerational decline curve formulation to capture oil wells’ long-term productivity and (2) a detrended coefficient of variation to measure time series volatility in dynamic simulations reliably.

Public finance instruments and output growth in Nigeria

This study investigates the empirical relationship between the aggregated and disaggregated components of fiscal policy variables and output growth in Nigeria using the vector error correction mechanism for the period of 1981 to 2021. This formulation was an improvement over previous empirical studies of the impact of public finance instruments on output growth in Nigeria. Our findings suggest that fiscal policy instruments (total expenditure, capital expenditure, recurrent expenditure, total revenue, primary fiscal balance, domestic debt, external debt, oil tax revenue, and non-oil tax revenue) exert significant impacts on output growth and most of the empirical results obtained support the hypothesised relationships between public finance instruments and output growth in Nigeria. However, aggregate federal government expenditure exerts a significant negative impact on output growth, while on the disaggregated scale, capital expenditure exerts a significant positive influence on output growth whereas recurrent expenditure exerts a significant negative impact on output growth. Given these findings, we recommend that the government of Nigeria, through its fiscal authorities, should adopt growth-enhancing fiscal policies that would engender macroeconomic stability and will be potent in refocusing recurrent expenditure towards ensuring productivity growth.

Fiscal Policy and Economic Growth a Cointegration Approach Based on Structural Breaks: Evidence from Algeria

In this paper, we studied the impact of fiscal policy tools on economic growth in Algeria for the period from 1970 to 2022, and after testing this impact, we took that oil taxes and non-oil taxes represent two independent variables of economic growth. This study shows that there is a long-term relationship between the two variables. The study also found that the cointegration test of Gregory Hansen and Hatami -J applies under regime change. The results of the study showed that there is a cointegration relationship between the variables in the case of the presence of one constructive interval. As for the two structural breaks, our paper confirmed the presence of a cointegration The relationship between these variables. We find the long-run coefficients for. The cointegration test has showed that there is an absence of a cointegration relationship, This method supported the hypothesis of the absence in a cointegration relationship in the case of the absence of structural breaks, while when we used the cointegration approach based on breaks, we confiremed clear evidence of this, in the case of more than three strictual breaks in the long-run relationship between variables.The results of this study were confirmed by the Maki test, for example it appears first that fiscal policy exerts a weak positive impact on economic growth, after 2015, while regular taxes are only affected in the long run according to New Keynesian expectations, and it is natural that taxes exert the opposite effect. We concluded that this is due to the decline in the price of oil and the impact on its revenues for approximately 5 years

The impact of petrol and diesel oil taxes in EU member states on CO2 emissions from passenger cars

The article aims to explain road CO2 emissions, including passenger car emissions in the EU member states, with the rates of indirect taxes (except VAT) for petrol and diesel oil. Apart from tax rates, the analysis includes some selected variables concerning economies and transport infrastructure, which impact CO2 car emissions. Compared to the existing literature, we focus on emissions from passenger cars and analyse more countries over a more extended period using more updated data. Our findings confirm that fuel taxes have a generally negative but limited impact on emissions from passenger cars. This impact is independent of whether we relate emissions to the number of inhabitants or GDP and is generally stronger in EU member states with higher taxes. In many countries, the economic affordability of fuels has significantly increased over the last few years. This phenomenon is another argument for a more active tax policy, i.e., general adjustment of the tax rates in line with inflation. There is also great importance for those adjustments in times of high fuel prices when governments are under tremendous pressure not only to stop tax increases but to reduce them, which was the case in 2022 after the Russian aggression on Ukraine.

НАЛОГ НА ДОБЫЧУ ПОЛЕЗНЫХ ИСКОПАЕМЫХ КАК ОДНА ИЗ ОСНОВНЫХ ПРОБЛЕМ РАЗВИТИЯ НЕФТЕГАЗОВОГО СЕКТОРА ЭКОНОМИКИ РОССИИ

Without a doubt, the role of the main energy carriers belongs to unique resources, namely oil and gas. Since they produce a colossal amount of extremely necessary products for almost all other industries – from agriculture to the military-industrial complex, etc. As is known, in the Russian Federation, the exploration of hydrocarbon resources is about 35%, which indicates enormous prospects for geological research in yet undiscovered deposits, as well as the fact that there is a lot of time for the development of the regulatory and tax base, production technologies and combating existing problems. This article examines an extremely pressing topic in recent times, namely, the mineral extraction tax as one of the main problems in the development of the oil and gas sector of the Russian economy. The relevance of this topic lies in the fact that throughout the development of our state there has been an important problem in the taxation of oil and gas fields due to their specific characteristics. At the same time, the mineral extraction tax is a fairly important element of the tax system of the Russian Federation and affects the revenues of the budget system of the Russian Federation.

The potential impact of policies and structural interventions in reducing cardiovascular disease and mortality: a systematic review of simulation-based studies.

The aim of the study was to investigate the potential effect of different structural interventions for preventing cardiovascular disease. Medline and EMBASE were searched for peer-reviewed simulation-based studies of structural interventions for prevention of cardiovascular disease. We performed a systematic narrative synthesis. A total of 54 studies met the inclusion criteria. Diet, nutrition, tobacco and alcohol control and other programmes are among the policy simulation models explored. Food tax and subsidies, healthy food and lifestyles policies, palm oil tax, processed meat tax, reduction in ultra-processed foods, supplementary nutrition assistance programmes, stricter food policy and subsidised community-supported agriculture were among the diet and nutrition initiatives. Initiatives to reduce tobacco and alcohol use included a smoking ban, a national tobacco control initiative and a tax on alcohol. Others included the NHS Health Check, WHO 25 × 25 and air quality management policy. There is significant heterogeneity in simulation models, making comparisons of output data impossible. While policy interventions typically include a variety of strategies, none of the models considered possible interrelationships between multiple policies or potential interactions. Research that investigates dose-response interactions between numerous modifications as well as longer-term clinical outcomes can help us better understand the potential impact of policy-level interventions. The reviewed studies underscore the potential of structural interventions in addressing cardiovascular diseases. Notably, interventions in areas such as diet, tobacco, and alcohol control demonstrate a prospective decrease in cardiovascular incidents. However, to realize the full potential of such interventions, there is a pressing need for models that consider the interplay and cumulative impacts of multiple policies. Rigorous research into holistic and interconnected interventions will pave the way for more effective policy strategies in the future. The study is registered as PROSPERO CRD42019154836. This article presents independent research funded by the National Institute for Health and Care Research (NIHR) Health Technology Assessment programme as award number 17/148/05.

Improving Russia’s Tax Policy in the Oil Production Taxation Field amid the World Economic Development

The paper reviews pressing issues related to the corporate taxation in the oil industry amid the financial crisis, sanctions imposed against Russia, and low oil prices. Special attention is paid to the analysis of the first results of the tax reform, to the introduction of a profit-based tax. The purpose of the study is to find an effective tax mechanism for the taxation of the oil industry. The subject of the study is the current issues of oil taxation, in particular, the application of the taxation mechanism of the financial results of oil companies and the reform of the taxation system of export duties to the oil refining industry.

Tax Compliance (Active Tax Payers) and Non-Oil Tax Revenue in Nigeria: Exposition of Fiscal Exchange Theory and Expectation Proposition

The paper investigated the tax compliance (active tax payers) and non oil revenue in Nigeria in relation to fiscal exchange theory and expectation proposition. The study adopted ex post facto research design; secondary data for nineteen years (2003 - 2022) were collected from various issues of the Federal Inland Revenue Services (FIRS) statistical bulletin and annual reports. Tax compliances as regressand variable was measured with number of actual annual total non oil tax revenue in Nigeria and Tax compliances among active tax payers of company income tax (CIT), Petroleum profit tax (PPT), Capital gain tax (CGT), Value Added Tax (VAT) and Personal Income Tax (PIT) as regressors. The data was analyzed using multiple regression analysis to establish the relationship between the dependent and independent variables. The findings revealed that tax compliance have significant effect on boosting tax revenue generation and that tax default can cause significant variation in government revenue. The variable in the model is significant at the 5% critical level and the regression coefficient reveals that 72.8% of the total variation in revenue is accounted for by tax compliance with other variables in the stochastic term accounting for the remaining 27.2%. Specifically, Tax Compliance (Active Tax Payers) is significantly and positively related to Active Tax Payers on Value Added Tax (ATVAT) (1.827925 ), Active Tax Payers on Company Income Tax (ATCIT) (2.84599) and Active Tax Payers on Petroleum Profit Tax (ATPPT) (2.286043 ), while Tax Compliance (Active Tax Payers) is negatively and insignificantly correlated with Active Tax Payers on Personal Income Tax (ATPIT)( -0.236908 ) Active Tax Payers on Capital Gain Tax (ATCGT)( - 0.236908 ) . It is recommended that Federal Inland Revenue Service should open more offices across the federation to increase the ease of paying taxes, set performance targets for managers of tax offices and sanction for non-performance.

How should the use of nonrenewables be taxed under a public budget constraint?

Most developed countries will be facing severe public budget constraints. We examine how extraction or use of nonrenewable resources should be taxed when governments need to collect commodity tax revenues. Moreover, we show how our results can be directly used to indicate how carbon taxation of nonrenewable energy sources should be increased in the presence of public-revenue needs. The obtained tax formula is an augmented, dynamic version of the standard Ramsey taxation rule. It distorts developed reserves, which are reduced, and their depletion, which is slowed down, going further in the direction prescribed for the resolution of the climate externality. We present a simple calibrated application of our results to illustrate how carbon taxation of oil should be strongly augmented, and the incidence of this adjustment on oil use and tax revenues.

Volatility spillover between oil and stock prices: Structural connectedness based on a multi-sector DSGE model approach with Bayesian estimation

This paper examine the connectedness between oil and stock markets using the WTI oil price and 10 S&P 500 price subindices data from 1989 to 2021. We present a novel approach for constructing a connectedness index based on a dynamic stochastic general equilibrium (DSGE) model with Bayesian estimation technique. In contrast to existing approaches, our DSGE-based approach has the advantage of (i) incorporating a large number of shocks and effectively distinguish the demand and supply shocks to both oil and stock markets; (ii) allowing the conduction of policy and welfare analyses. By estimating the DSGE model, we find that demand shocks to oil and stock markets produce significant spillover effects compared to the supply shocks. We also show that the role of demand and supply shocks differ largely across sectors. We propose an oil-tax policy rule that can reduce the interconnectedness between oil and stock markets. The optimal oil tax rate that balances the tradeoff between systematic risk and social welfare is computed.

Closed and Open Loop Oil Taxation Policies in New Mexico

Closed and Open Loop Oil Taxation Policies in New Mexico

Oil Tax Maneuver: Analysis of the Consequences and Forecast of the Impact on the Development of a Company.

The article discusses the transformation of the taxation system in the oil and gas sector and modern approaches to assessing its impact on the development of resources. A predictive model for assessing the impact of the tax maneuver on the development of an oil company has been proposed. Approbation of the approach was carried out on the example of the Irkutsk Oil Company and Rosneft PJSC. The forecast showed the same impact of the tax maneuver on the largest oil company in Russia and on a company of regional importance.

Who profits from windfalls in oil tax revenue? Inequality, protests, and the role of corruption

We investigate the relationship between oil windfalls and income inequality using the subnational data of one of the resource-richest and highly unequal countries in the world – Russia. While previous literature produced contradictory findings due to the use of an aggregate measure of oil rents mainly in cross-national settings, we focus exclusively on oil rents that accrue to the subnational governments across one country. Our estimation strategy takes advantage of the two specific features of Russian oil taxation: 1) the policy change when sharing oil extraction taxes with local budgets was discontinued; and 2) the oil tax formula being tied directly to the international oil prices making oil price shocks an exogenous measure of change in oil rents. When we look at the period with oil tax revenues shared with the regional governments, we find that oil windfalls had increased income inequality and benefited the wealthiest quintile of the population in regions with more intense rent-seeking. Further, positive oil price shocks combined with greater rent-seeking reduced the share of labor income but increased the income share from unidentified sources traditionally associated with corruption. These effects of oil windfalls disappeared after the Russian government discontinued oil tax revenue sharing with regional governments. Finally, we examine some political implications of rising inequality due to the appropriation of oil windfalls. We find a positive effect of rising inequality on the frequency of protests associated with grievances among the poor and disadvantaged social groups; this effect, however, exists only in relatively democratic regions.

Who Profits from Windfalls in Oil Tax Revenue? Inequality, Protests, and the Role of Corruption

We investigate the relationship between oil windfalls and income inequality using the subnational data of one of the resource-richest and highly unequal countries in the world – Russia. While previous literature produced contradictory findings due to the use of an aggregate measure of oil rents mainly in cross-national settings, we focus exclusively on oil rents that accrue to the subnational governments across one country. Our estimation strategy takes advantage of the two specific features of Russian oil taxation: 1) the policy change when sharing oil extraction taxes with local budgets was discontinued; and 2) the oil tax formula being tied directly to the international oil prices making oil price shocks an exogenous measure of change in oil rents. When we look at the period with oil tax revenues shared with the regional governments, we find that oil windfalls had increased income inequality and benefited the wealthiest quintile of the population in regions with more intense rent-seeking. Further, positive oil price shocks combined with greater rent-seeking reduced the share of labor income but increased the income share from unidentified sources traditionally associated with corruption. These effects of oil windfalls disappeared after the Russian government discontinued oil tax revenue sharing with regional governments. Finally, we examine some political implications of rising inequality due to the appropriation of oil windfalls. We find a positive effect of rising inequality on the frequency of protests associated with grievances among the poor and disadvantaged social groups; this effect, however, exists only in relatively democratic regions.

Who bears the burden of greening electricity?

Faced with the threat of climate change many countries are promoting renewable energies to decarbonize their energy system. A common policy to foster electricity from renewable energy sources are feed-in tariffs which are financed by surcharges on electricity prices. Higher electricity prices in turn raise concerns on regressive distributional impacts. In this paper, we investigate the distributional impacts of three alternative policies to subsidize renewable energy production in Spain: (i) exemptions from the electricity surcharge for residential consumers, (ii) an increase in mineral oil taxes, and (iii) an increase in value-added taxes. We find that all three options can attenuate the regressive distributional effects compared to feed-in tariffs. For our quantitative impact assessment, we couple a microsimulation model with a computable general equilibrium model to capture the incidence on heterogeneous households in an economy-wide framework.

How Should We Tax the Use of Nonrenewables Under a Public Budget Constraint?

Most developed countries will be facing severe public budget constraints. We derive a formula for how extraction or use of nonrenewable resources should be taxed when governments need to collect commodity tax revenues. Moreover, we show how it can be directly used to indicate how carbon taxation should be increased in the presence of public-revenue needs. The obtained tax is an augmented, dynamic version of the standard Ramsey taxation rule. It distorts developed reserves, which are reduced, and their depletion, which is slowed down, going further in the direction prescribed for the resolution of the climate externality. We present a simple calibrated application of our results to illustrate how the carbon taxation of oil should be augmented, and the incidence on oil use and tax revenues.

Who Profits from Windfalls in Oil Tax Revenue? Inequality, Protests, and the Role of Corruption

Who Profits from Windfalls in Oil Tax Revenue? Inequality, Protests, and the Role of Corruption

Spatially variable taxation and resource extraction: The impact of state oil taxes on drilling in the US

We estimate the responsiveness of nonrenewable resource firms to taxes on output using spatially explicit data from the oil sector in the United States. Using a model of resource firm capital allocation over space, we show that responses to spatially-varying taxes differ from responses to equivalent changes in the common output price. A larger response to tax rates occurs because the tax change only affects the returns to drilling in a single state, whereas a price change affects both the returns to drilling in a state and the opportunity cost of not drilling in other states. Econometrically, we estimate the effect of severance taxes on oil drilling. We find that the response to a one dollar increase in tax per unit of production has an effect at least eight times as large as the effect of an equivalent decrease in output price. The tax response is inelastic, implying that an increase in state tax rate would increase revenue. We do not find evidence of spillovers between states in the local areas near state borders.

An Analysis on the Competitiveness of the Oil Refinery Market in South Korea

This study analyzes the degree of competition in the oil refinery market in Korea, which is considered an oligopoly market. The price of gasoline and diesel and the quantity of supply are used to identify the market competition. We also analyze whether the oil tax reduction policy has affected market competition. The competitiveness of the market was examined using monthly data from 2008 to 2019. Bresnahan-Lau method was employed to estimate the degree of competition in the oil refinery market, which is frequently used in the industrial studies. The analysis shows that the gasoline and diesel markets seem close to a perfect competitive market. Also, the tax cut has weakened market competition. In other words, the monopolistic power has increased in the market, so consumers have not benefit from the price cuts as much as tax cuts. Although the oil refinery market where four major companies are competing, the government's monitoring and price disclosure system help the market to be highly competitive as much as a perfect competition market. The tax cut, in the high oil price era, has a negative effect on the competition because of an information asymmetry about the price-setting process between suppliers and consumers.

Reform of the system of oil and gas natural resource payments for the purposed of attracting investments: the experience of the People’s Republic of China

The subject of this research consists in the analysis of the experience of the People’s Republic of China (PRC) on reform of the system of taxation of oil and natural gas extraction, which can present significant interest for Russian executive branch and researchers in the conditions of reform of Russian natural resource legislation, as well as introduction of the excess profit tax (Article 25.4 of the Taxation Code of the Russian Federation). Moreover, this is the first Russian-language writer article on exploring the content of the new PRC law “On Resource Tax”, which will be enacted from September 1, 2020. Based on the works of Russian, American, and Chinese scholars alongside Russia’s and China’s legislations, the article employs the method of synchronized and diachronic (historical) comparison and general scientific methods (formal-logical, analysis, synthesis) for determining peculiarities of China’s approach towards execution of legal reforms. The following specificities of China’s legal reforms were determined: preliminary formulation of goals of the legislative changes at the highest levels of state government, testing of the legislative changes in the territories of separate provinces, priority of goals of national development over budget revenue, adaptation of traditions of China’s legal technique to the requirements of foreign investors. The conclusions made in this research can be of interest for lawmakers, as well as all parties interested in comparative legal studies.