Mexico has large extractive industries and it traditionally has raised sizable fiscal revenues from the oil and gas sector. A confluence of factors—elevated commodity prices, financial challenges of the state-owned oil company Pemex, and revenue needs for financing social and public investment spending over the medium term—suggest that a review of Mexico’s taxation regimes for natural resources would be opportune, against the backdrop of a comprehensive approach to tackling Mexico’s challenges. This paper identifies opportunities for redesigning mining taxation to increase somewhat the revenue intake while maintaining the favorable investment profile of the sector. It also discusses recent reforms to the oil and gas fiscal regime and future reform considerations, with attention to the attractiveness of investment on commercial terms—an issue that should be placed in the context of an overall reform of Pemex’s business strategy and possibly of the energy sector more generally.

Public policies in taxation and revenue management are key to ensuring natural resource wealth results in economic development. Tax policy and systems should ensure that whenever natural resources are extracted, the host state receives a fair share of revenue. Revenue management policies are required to ensure that government revenues from natural resources are wisely used to finance sustainable economic development. This Economic Paper analyses key issues in natural resource taxation and revenue management and recommends policies that can improve countries’ economic performance. The discussion draws on economic theory, empirical evidence and the work of the Commonwealth Secretariat.

Compilation of studies by various authors on taxation of natural resources with respect to federal-provincial relations.

Oil, gas and mineral deposits are a substantial part of the wealth of many countries, not least in developing and emerging market economies. Harnessing some part of that wealth for fiscal purposes is critical for economic development: in few areas of economic life are the returns to good policy so large, or mistakes so costly.

This paper provides a conceptual overview of economists’ attempts to learn about the effects of taxes on extractive resources. The emphasis is on research methods and techniques, with no attempt to provide a comprehensive tabulation of previous empirical results or policy conclusions regarding preferred tax instruments or systems. We argue, in fact, that the nature of such conclusions largely depends on the researcher’s choice of modeling framework. Many alternative frameworks and approaches have been developed in the literature. Our goal is to describe the differences among them and to note their strengths and limitations.

Public policies in taxation and revenue management are key to ensuring natural resource wealth results in economic development. Tax policy and systems should ensure that whenever natural resources are extracted, the host state receives a fair share of revenue. Revenue management policies are required to ensure that government revenues from natural resources are wiselyused to finance sustainable economic development.This Economic Paper analyses key issues in natural resource taxation and revenue management and recommends policies that can improve countries' economic performance. The discussion draws on economic theory, empirical evidence and the work of the Commonwealth Secretariat.

This text describes the historical development of state and local taxation of natural resources, the limitations on taxing powers, and political aspects. It includes a twelve state index.