TY - JOUR AU - Dasgupta,Partha AU - Heal,Geoffrey AU - Stiflitx,Joseph E. TI - The Taxation of Exhaustible Resources JF - National Bureau of Economic Research Working Paper Series VL - No. 436 PY - 1981 Y2 - December 1981 UR - http://www.nber.org/papers/w0436 L1 - http://www.nber.org/papers/w0436.pdf N1 - Author contact info: Partha Dasgupta Faculty of Economics & Politics University of Cambridge The Austin Robinson Building Cambridge, ENGLAND CB3 9DD E-Mail: partha.dasgupta@econ.cam.ac.uk Geoffrey Heal Graduate School of Business 616 Uris Hall Columbia University New York, NY 10027-6902 Tel: 212/854-6459 Fax: 212/316-9219 E-Mail: gmh1@columbia.edu Joseph E. Stiglitz Uris Hall, Columbia University 3022 Broadway, Room 814 New York, NY 10027 Tel: 212/854-0671 Fax: 212/662-8474 E-Mail: jes322@columbia.edu AB - This paper analyzes the effect of taxation on the intertemporal allocation of an exhaustible resource. A general framework within which a large variety of taxes can be analyzed is developed and then applied to a number of specific taxes. It is shown that there exists a pattern of taxation which can generate essentially any desired pattern of resource usage. Many tax policies, however, have effects which are markedly different both from the effects that these policies would have in the case of produced commodities-and from those which they are designed (or widely thought) to have. For instance, if extraction costs are zero, a depletion allowance at a constant rate (widely thought to encourage the extraction of resources) has absolutely no effect; its gradual removal (usually thought to be preferable to a sudden removal) leads to faster rates of depletion (and lower prices) now, but higher prices in the future; which its sudden and unanticipated removal has absolutely no distortionary effect on the pattern of extraction. More generally, it is shown that the effects of tax structure on the patterns of extraction are critically dependent on expectations concerning future taxation. (The changes in tax structure which have occurred in the past fifty years are of the kind that, if they were anticipated, (or if similar further changes are expected to occur in the future) lead to excessively fast exploitation of natural resources. However, if it is believed that current tax policies (including rates) will persist indefinitely, the current tax structure would lead to excessive conservationism. Thus, whether in fact current tax policies have lead to excessive conservationism is a moot question. ER -