Making concessions pay? Historical vs. potential tax revenues from Laos’s rubber sector

• Published in: World development Vol. 172; p. 106359
• Main Authors: Dwyer, Michael B., Nanhthavong, Vong
• Format: Journal Article
• Language: English
• Published: Elsevier Ltd 01-12-2023
• Subjects: Appropriate taxation; Concession inventories; Global land rush; Land deals; Laos; Rubber; Appropriate taxation; Concession inventories; Global land rush; Rubber; Land deals; Laos
• ISSN: 0305-750X; 1873-5991
• DOI: 10.1016/j.worlddev.2023.106359

•The issue of land-deal taxation featured centrally in early debates about the global land rush, but has since largely disappeared.•This paper uses spatial and non-spatial data from Laos’s recent land-concession inventory to model potential taxation revenues from rubber concessions.•Our results imply potential cumulative tax revenues of tens to hundreds of millions of dollars, depending on taxation method and rate.•This highlights under-taxation’s exacerbation of coercive land grabs’ initial injustice, but also implies possible economic restitution after the fact.•Nonetheless, if heightened concession taxation occurs, its rents are likely to be subjected to multiple competing claims.
Under-taxation has been a prominent feature of the global land rush, figuring centrally in early concerns that transnational land deals constitute a new round of land grabbing rather than a source of productive investment. In the years since, however, under-taxation has been widely ignored in subsequent literature on state land concessions in the agri-plantation sector across the global South. To address this gap, this paper draws on ongoing research in Laos, where improved concession inventory efforts have helped stimulate a wide-ranging debate (both in and out of government) about the country’s still-opaque processes of concession taxation. We use the rubber sector to examine a pair of concession-taxation strategies that have been pursued to varying degrees both in Laos and more broadly: taxing land from the time it is alienated to a concessionaire (a land fee model), and taxing the resource itself – in this case rubber plantations – from the time they become productive (a royalty model). Using a quantitative-geographic approach enabled by Laos’s recently updated land concession inventory, we estimate potential tax revenues from rubber plantations under four taxation regimes that were deployed in various parts of the country over the last decade and a half: two of each type, with each type including higher and lower per-unit variants. Our analysis of the space of potential taxation implies significant opportunity costs inherent in the status-quo approach to taxation, which we discuss via the example of unaddressed need for concession-related compensation. Especially at the higher-end range, where taxation potentials total in the tens of millions of dollars per year, we find that Laos’s rubber-concession landscape has significant potential to help address this issue. To the degree that under-taxation is addressed in the future, however, new concession-tax revenues will increasingly be subject to spending demands from outside the rubber sector.