Henry Ergas, Mark Harrison and Jonathan Pincus “Some Economics of Mining Taxation”, Economic Papers, vol. 29, no. 4, December, 2010, 369–383.

Abstract:
We argue five main propositions. First, the choice between royalties and profit-based taxation involves an efficiency tradeoff, between diminished incentives to produce output on one hand, and diminished incentives to minimise costs on the other (as in Laffont and Tirole, 1993). So the Brown tax is indeed a tax, and one that reduces the incentive to mine. Next, the ex post Resource Super Profits Tax (RSPT) falls on quasi-rents as well as on rents, and therefore involves some expropriation. Third, there may be a case in favour of a retrospective RSPT or the like, but it has yet to be made persuasively. Fourth, the successor to the RSPT – the Minerals Resource Rent Tax (MRRT) – has many of the inefficiencies of the RSPT but adds some further serious inefficiencies of its own. Last, the value of revenues from taxes such as the RSPT and the MRRT is usually over-stated, as those revenues are highly risky. The failure to take account of the risky character of those income streams amounts to fiscal illusion and make it more likely that unwise spending commitments will be made.

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Some_economics_of_mining_taxation.pdf

As we hand over the millions to Toyota, will the real hybrid please stand up, asks Henry Ergas

THERE are, Lord Rothschild mused as he reflected on Britain's attempts at becoming an international powerhouse of high technology, two ways of going to rack and ruin. The first is wine, women and song; the second is listening to the advice of engineers. Of these, the first may be the more pleasurable, but the second is by far the more certain.

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Subsidised_farce_on_four_wheels.pdf

Don't regulate markets on scant research, argues Henry Ergas

ONLY three weeks ago, at a conference organised by The Australian and the Melbourne Institute, Finance and Deregulation Minister Lindsay Tanner was trumpeting the Rudd 264's commitment to letting markets work. Now the 264 seems poised to regulate petrol retailing, despite findings by successive inquiries that the market is workably competitive.

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Evidence_doesn_t_back_fuel_scheme.pdf

The Epic case has been important in providing the first judicial interpretation of the access pricing provisions of the Gas Code and hence of terms that are common to the main regulated access regimes in Australia. In this paper, made all the more timely by the announcement of a Productivity Commission review of the Gas Code, Henry Ergas summarises and evaluates the main elements of the Epic decision and considers their implications for access regulation.

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epic_in_retrospect_and_prospect_HE_26-06-03.pdf

This paper considers the difference between two types of regulation as they affect the regulated firm. Using the electricity distribution industry in Victoria as a case study, we discuss the impact of the periodic resetting of regime parameters which is a standard feature of price cap regimes. We explain why such resets are necessary and how the resulting incentives differ from those generated by rate of return regulation.

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papers-ergas-org-may01.pdf