Mine Taxation

Question 1

Represent a substantial cost of doing business in the minerals industry and often have a significant impact on corporate
investment decisions.

Answer 1

Taxes

Question 2

A theory that is based on the concept that minerals are a free gift of nature for the benefit of all mankind, and therefore the benefits derived from resource extraction should be shared by all.

Answer 2

Natural Heritage

Question 3

A theory that assumes that since an ore body cannot be dismantled or moved to another location, any mine can be taxed with impunity.

Answer 3

Captive

Question 4

“any nonpenal yet compulsory transfer of resources from private to the public sector levied on the basis of predetermined criteria and without reference to specific benefits received so as to accomplish some of the government’s economic
and social objectives

Answer 4

Tax

Question 5

Taxes are generally implemented to achieve one or more of the following objectives:

Answer 5

1. Raising Revenue
2. Economic Development
3. Price Stability
4. Wealth Redistribution
5. Regulatory Medium

Question 6

Taxes are generally imposed on one of the following bases:

Answer 6

1. Income
2. Wealth
3. Expenditures
4. Activity

Question 7

Usually based on net income, or gross income less certain defined deductions. The tax rate is generally either fixed or progressive (i.e.,
higher levels of net income pay higher tax rates.)

Answer 7

Income taxes

Question 8

Typically an ad valorem (according to value) tax based on appraised value of real and personal property

Answer 8

Property taxes

Question 9

A tax unique to the extraction of natural resources
(renewable as well as nonrenewable) and commonly considered to be an
excise tax.

Answer 9

Severance taxes

Question 10

A tax imposed upon the consumption of a retail sale.

Answer 10

Transaction tax

Question 11

A tax imposed on the manufacture, sale, or consumption of
specific, selected commodities and/or activities

Answer 11

Excise tax

Question 12

Adam Smith (1904) set forth four criteria which he referred to as
“cannons of taxations” for a “good tax”.

Answer 12

1. Equitable
2. Convenient
3. Certain
4. Economical

Question 13

referring to equal treatment of similarly situated
taxpayers

Answer 13

Equitable

Question 14

referring to a tax that can be readily and easily
assesses, collected, and administered.

Answer 14

Convenient

Question 15

referring to consistency and stability in the prediction of
tax-payers’ bills and the amount of revenue collected over time.

Answer 15

Certain

Question 16

referring to the fact that compliance and
administration of a tax should be minimal in terms of cost.

Answer 16

Economical

Question 17

referring to the fact that a tax should have the ability
to produce a sufficient and desired amount of revenue to the taxing
authority

Answer 17

Adequacy

Question 18

referring to the
use of taxes to reallocate resources in order to achieve various
specific social and economic objectives.

Answer 18

Achievement of Social and Economic effects

Question 19

recognizing that a tax should not encourage
inefficient allocation of resources by being so extreme that
taxpayers make counterproductive economic decisions.

Answer 19

Neutrality

Question 20

total income derived from product sales.

Answer 20

Revenue

Question 21

an amount deducted from revenue to arrive at taxable
income

Answer 21

Deduction

Question 22

The amount on which a tax is calculated.

Answer 22

Taxable income

Question 23

a deduction over a period of years for cost of plant and equipment (real and personal property)

Answer 23

Depreciation

Question 24

any deduction other than depreciation or depletion
allowed over a period of years.

Answer 24

Amortization

Question 25

an expenditure treated as a deduction in the year it is
made

Answer 25

Expense

Question 26

to save an expenditure for deduction in one or more later
years.

Answer 26

Defer

Question 27

To establish an account for an expenditure which, depending on the type of expenditure, may or may not qualify as a deduction.

Answer 27

Capitalize

Question 28

the act of foregoing a deduction until some amount of money is recouped. Generally associated with an amount of money which was previously expensed, but which should have been capitalized.

Answer 28

Recapture

Question 29

the amount in a capitalized account at any point in time. The original basis is usually the cost of an asset

Answer 29

Basis

Question 30

an outflow of money for the purchase of goods or
services

Answer 30

Expenditure