Abstract:
Motivated by the fact that the taxation of natural resources is both crucial and particularly challenging for developing countries, this paper draws on a unique dataset to produce empirical evidence on two issues pertaining to the fiscal impact of oil. On a sample of 31 countries during the 2000s oil price boom, we first assess which country and sector characteristics are correlated with the effective tax on oil, i.e. the share of oil income collected by the government. Secondly, we test whether oil revenue evicts traditional tax revenues. We propose a new methodology to address this question and we conclude to the absence of such an eviction effect: we observe no effect of oil revenue on non-oil taxes through taxation channels, and linkages with the non-oil economy seem to yield additional non-oil tax revenues. These econometric analyses are complemented by six comparative case studies of countries observed before and after oil production begins. Historical, institutional and oil sector-specific information allows to account for differences observed in the evolution of the effective tax on oil and of non-oil taxes.
