Emerson, CraigLloyd, Peter JohnAustralian National University. Centre for Economic Policy Research2025-07-232025-07-23?09498383650725-430xhttps://hdl.handle.net/1885/733766990Australian State governments have begun to increase royalty rates and other mineral taxes. The most instructive approach to taxation policy for the minerals sector is to set up a general model of mines which yields the optimal structure of taxes. A model of mine production under uncertainty is developed, following Leland. The optimal tax is a single tax with two parts, a bonus bid and conditional tax payments based on the ex post rent of the mine. The actual structure of taxes levied by State and Commonwealth governments is seen to be distinctly sub-optimal in several respects. Proposals to move the actual towards the optimal structure are made, recognising some of the constraints on information and the maximum acceptable rate of tax reforms. These proposals include a movement at the maximum feasible rate towards a single two-part tax, with the early introduction of open lump-sum bidding for new leases. In the process of moving towards the single two-part tax it is proposed that specific taxes be converted to ad valorem taxes, or ad valorem taxes to taxes based on annual profits, or that the ordinary income tax base and rates be changed to those of a tax on rent. Some combination of these changes should preferably be made simultaneously.i, 41 p. ; 21 cm.en-AUAuthor/s retain copyright1981-10