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Petroleum Tax Reform Proposals in Norway and Denmark

Abstract:
During the past two years similar petroleum tax reforms have been proposed in Norway and Denmark. Both were based on results on neutral taxation derived by Boadway and Bruce (1984) and Fane (1987). In this paper the main features of the proposals are presented, and important problems of implementation are highlighted. Topics for further research are pointed out also. While the risk characteristics of tax deductions caused major disagreements between experts and oil companies, the after-tax cost of capital for risk free cash flows is a question less clearly resolved within the economics literature. Another topic for disagreement is value additivity, disputed by the companies.

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Energy Specializations: Petroleum – Refining and Products; Petroleum – Markets and Prices for Crude Oil and Products; Petroleum – Policy and Regulation

JEL Codes:
L1 -
L13 - Oligopoly and Other Imperfect Markets
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General

Keywords: oil, taxes, rent, neutrality, Norway, Denmark

DOI: 10.5547/ISSN0195-6574-EJ-Vol23-No4-2


Published in Volume23, Number 4 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.