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What is the best mining royalty regime?

Comments on Mitchell Hooke “Just a case of hypochondria”, 15/04/2010, http://www.theaustralian.com.au/news/opinion/just-a-case-of-hypochondria/story-e6frg6zo-1225853793603

Most of Hooke's arguments are correct.

There is, however, an issue of how mining royalties should be levied, that is, should be based on value of mining production, or should it be based on profit or value added. It seems that the latter may be more preferred.

Even under a royalty regime based on profit or value added, then there is also an issue whether it should be flat or progressive based on rate of profitability measured by capital.

It is reasonable to argue that the latter is superior given the dramatic changes in the prices of mineral products and oil.

However, the nation should guard against unnecessary jealous of mining companies’ profitability when mining boom is going on. Boom and bust are much more significant for mining than many other sectors.

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