Rentas económicas, tributación y royalties

The main goal of this article is to contribute, based on economic theory and the best empirical evidence available, to the public policy debate about the design and implementation of a mining royalty in Chile. For this purpose, a conceptual analysis is first conducted on the existence of economic rents that justify the collection of royalties on non-renewable natural resources in many countries. Subsequently, different implementation alternatives for a royalty are analyzed, taking into account a country’s tax policy and the objective of generating revenue with minimal distortions, along with the advantages and disadvantages of each alternative. In this context, the existing royalty in Chile is examined. Finally, in order to consider the potential effect of a royalty on mining investment, which is one of the main concerns in the public debate in Chile, especially regarding foreign investment, the impact of taxation on investment in a country is analyzed. The main conclusion of this analysis is that the best alternative for implementing a royalty on non-renewable natural resources is a fixed percentage rate on operational margins, as it allows capturing the economic rent associated with their exploitation while minimizing possible distortions in decision-making and optimal patterns of exploration and resource exploitation. Finally, the level of such a rate should be analyzed in conjunction with the existing taxes so as not to significantly affect investment in the country, particularly foreign investment and new investment projects.