An effects analysis of China's metal mineral resource tax reform: A heterogeneous dynamic multi-regional CGE appraisal

The heterogeneity in resource endowment and the “resource curse” require different tax rates for different regions in resource tax ad valorem reform. Considering that copper is critical, widely distributed and closely related to the economy, a dynamic multi-regional computable general equilibrium (CGE) model is constructed to investigate the impacts of different copper resources tax rates on regional economies, thus obtaining the optimised resource tax rate due to the “resource curse” in different regions. Under different policy scenarios of the copper resource tax, namely, 2%, 5% and 8%, this paper estimates the impacts of resource tax ad valorem reform on copper consumption, macroeconomic variables and sector outputs among 4 representative regions, which is significantly different from the results from national perspective in previous studies. The simulated results are as follows: resource tax ad valorem reform has an enormous influence on copper consumption and has slightly positive impacts on resident income, government revenue, total consumption and real gross domestic product (GDP), while it affects copper-related sectors outputs in a negative way. Additionally, the impacts under the same scenario are significantly different among 4 regions. Moreover, under different tax rate scenarios, copper consumption increases first and then decreases, resulting in an inverted U-shaped pattern. This paper built a dynamic computable general equilibrium (DCGE) model of copper resource tax ad valorem reform from a regional perspective, thus improving the CGE model on a national scale compared to previous studies and providing an analytical paradigm for the reform of other strategic metal mineral resource taxes in China.