Sammendrag
The Norwegian salmon aquaculture industry is a potential candidate for an additional tax due to extraordinary profitability over the last years. In all producer countries salmon aquaculture is subject to different regulations which indirectly restrict output at the firm level, and may restrict global supply in the short run. We argue that the extraordinary profitability – an economic rent - is a mixture of resource rent and regulation rent. We find a fairly wide range of estimates of the economic rent, depending on the inclusion of different types of capital, valuation of different types of capital and the rate of return requirement.
In Norway, the petroleum and hydropower sectors have created a precedent for a potential extraordinary tax on the salmon aquaculture sector. These sectors face additional taxes on income (or profit) and other taxes. The arguments are very similar to those presented above, i.e. that petroleum resources and water resources are public property, that they are sources of resource rents, and that it is possible to design taxes that are fairly neutral. However, the tax regimes are subject to debate regarding neutrality, and how e.g. non-neutrality lead to under-investments in hydropower plants.
We analyze an extraordinary profit tax from an economic perspective and from a legal perspective. We evaluate the hydropower tax model using analyses of different salmon aquaculture investment projects for conventional open cage inshore technology, offshore technology and closed technology. We find that the hydropower tax is not neutral. In other words, it will change investment decisions in salmon aquaculture, particularly for new technologies which are more capital intensive and more sustainable in some dimensions. This is partly due to the design of the uplift mechanism for investments, which is due to assumptions on capital markets and rate of return requirements which are not satisfied in real markets.
A tax which is non-neutral can have effects through different mechanisms: (1) Location of investments and production outside Norway, (2) investments in aquaculture plants on land, in the coastal zone and offshore, (3) investments in alternative technologies with different environmental effects, (4) vertical and horizontal organization of value chains through e.g. mergers and acquisitions, (5) economic geography of production activities in salmon value chain within Norway. We argue that all of these distortions will be present if a hydropower type tax on profits is introduced. Companies will have strong financial incentives to shift profits from sea based salmon aquaculture in Norway. The administrative costs may be high relative to tax revenue, and there are risks of legal disputes on many aspects related to the tax.
Given the risks associated with a resource rent tax we suggest that a royalty on sales (or fixed amount per unit of salmon produced) could be introduced first. This is a non-neutral tax, but could create less incentives to shift revenue and costs, and would involve much smaller administrative costs and risks of legal disputes.
Vis fullstendig beskrivelse