A distinctive feature of nonrenewable natural resource markets is that the marginal revenue from the sale of the resource exceeds the marginal cost of extracting it. This difference constitutes a rent, which is due strictly to the nonrenewability of the resource stock. The in situ resource being very often under public ownership, taxes can then become instruments used by governments to recuperate this scarcity rent from the private resource extracting firms to which the extraction has been delegated. This use of the tax system is particularly important in the case of nonrenewable natural resources and the taxes used can take different forms. So-called severance taxes are one type of tax that is often used, in the form of a tax either on the quantity extracted (a specific tax) or on the market value of the resource extracted (an ad valorem tax). Profit or net revenue taxes, variably defined, are also common. Some form of fixed licence fees, independent of the quantity extracted or of the revenues, may also be used in some cases.
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