Mineral Taxation in Jamaica: An Oligopoly Confronts Taxes on Resource Rents — and Prevails |
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| Authors: | M H I Dore |
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| Institution: | M. H. I. Dore, Ph.D., is associate professor of economics, Brock University, St, Catharines, Ontario L2S 3A1, Canada, and Visiting Scholar, Cambridge University, England. The author's research is supported in part by Grant no. 410-80-0552 from the Social Sciences and Humanities Research Council of Canada. I am grateful to Joy Dunkerley, Sanjaya Lall, Pierre Lasserre and Geoff Harcourt for helpful comments on earlier drafts of this paper. Naturally I alone am responsible for any remaining errors. |
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| Abstract: | Abstract . The reallocative effects on bauxite production in Jamaica following the imposition of an ad valorem tax in 1974 are considered. The international aluminum industry, being both vertically and horizontally integrated, evolved a successful strategy of time-phasing bauxite production capacity worldwide. The non-neutral tax not only made Jamaican bauxite uncompetitive with the output of other producers but also eroded the cost differential between bauxite and alternative sources of aluminum ore. The study claims that the consequences of the tax have been disastrous, and it argues that the ad valorem tax on the recovered ore must be replaced by some form of a profits-based tax. |
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