Government responses to oilfield discoveries: Impact of resource wealth on non-resource tax revenues

Lartey, Abraham

Abstract

It has often been argued that countries that produce natural resources mobilize less non-resource tax revenues than other countries. In this paper, we exploit the exogenous variation in the timing of giant oilfield discoveries to estimate the causal impact of natural resources on taxation. The timing of giant oilfield discoveries is arguably exogenous and thus renders them appealing to empirically examine this argument. This allows us to examine the performance of non-resource tax revenue effort before and immediately after discovery as well as the period corresponding to the inflow of revenues from the production. We find that non-resource tax revenues tend to increase in the period following the discovery before the onset of production and after production commences. This effect is due to an increase in non-resource indirect tax revenues. Further analysis shows that both the total and indirect non-resource tax revenues, experience an increase in only low- -middle income countries, and largely driven by an increase in the consumption of goods and services.

Citation

Lartey, A. (2024). Government responses to oilfield discoveries: Impact of resource wealth on non-resource tax revenues. Journal of Government and Economics, 15, Article 100119. https://doi.org/10.1016/j.jge.2024.100119

• Journal Article Type: Article
• Acceptance Date: Sep 11, 2024
• Publication Date: Sep 24, 2024
• Deposit Date: Oct 28, 2024
• Publicly Available Date: Oct 28, 2024
• Journal: Journal of Government and Economics
• Electronic ISSN: 2667-3193
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 15
• Article Number: 100119
• DOI: https://doi.org/10.1016/j.jge.2024.100119
• Keywords: Natural resources, Tax revenue, Giant oilfield discovery
• Publisher URL: https://www.sciencedirect.com/science/article/pii/S2667319324000235