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An analysis of the Western Australian gold royalty
Author(s) -
Fraser Rob
Publication year - 1999
Publication title -
australian journal of agricultural and resource economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.683
H-Index - 49
eISSN - 1467-8489
pISSN - 1364-985X
DOI - 10.1111/1467-8489.00067
Subject(s) - revenue , profit (economics) , ad valorem tax , economics , production (economics) , liability , tax revenue , microeconomics , relation (database) , public economics , finance , tax reform , computer science , database
This article analyses the modified form of ad valorem royalty recently announced by the WA government in relation to gold production, which features a threshold price below which there is no tax liability and compares this royalty with a profit‐based royalty. The level at which the threshold price is set plays an important role in determining the performance of the royalty in relation to its impact on production and the expected level and variability of tax revenue. It is argued that the higher this price is set, the stronger the grounds for preferring a profit‐based royalty, even taking into account the reliability of each form for generating tax revenue.