METHODOLOGICAL APPROACH TO DETERMINE AMOUNT OF DIFFERENTIAL MINING RENT

Abstract

Residents of leading foreign countries with a developed mining industry are citizensrentiers. The Association Agreement between Ukraine and the EU prompts the Government of Ukraine to reduce poverty. Therefore, it is necessary to optimize the withdrawal mechanism of mining rent and its fair distribution between the owner of the subsoil – the Ukrainian people – and subsoil users. The essence of the author’s original methodology for determining the amount of differential mining rent to establish rental payments for the use of subsoil for extraction of minerals, adequate to modern economic realities, is revealed. An economic mechanism for the fair distribution of mining rent is proposed. The author has proved the presence of a significant unaccounted cash flow, which should become the basis for the revival of our state and transformation of each Ukrainian into a citizenrentier. To do this, it is necessary to form a new system of mining rent withdrawal. The system should be based on taxation of surplus profits of subsoil users – the surplus, that is, the difference between profits received by subsoil user and average marginal profit over the branch of extractive industry. To the further development of the theory of a rent, it has been worked out: (i) methodological approach to determine the amount of differential mining rent; (ii) algorithm and the author’s methodology for determining the amount of differentiated rent payments for the use of subsoil for extraction of minerals, taking into account mining, geological and other conditions for extraction of minerals; (iii) economic mechanism for mining rent withdrawal from subsoil users, which is the scientific novelty of this study. Then the rent will correspond to the essence of a rent, that is, will take into account mining, geological and other conditions for the extraction of minerals, market conditions, and to a certain extent the degree of risk. When mining conditions deteriorate, mineral resources are exhausted, their production costs increase, profits are reduced, then subsoil users must pay lower taxes. Calculations carried out within the framework of the proposed mechanism make it possible to determine which iron producing enterprises in Ukraine have to pay mining rent. Implementation of the author’s methodology will preserve the function of the rent as an economic tool for regulating the mining relations in the field of subsoil use and will contribute to the “working status” of art. 13 of the Constitution of Ukraine, as well as to the formation of a civil property institute on mineral raw materials and a fund of civil dividends.