Abstract

This paper investigates the effect of gold rent-sharing on non-resource tax revenues in 19 African gold-producing countries over the period 2009–2020. The study uses the average effective tax rate (AETR) as a de jure measure of the government’s share of gold rents and employs a panel smooth transition regression (PSTR) model to account for potential non-linearity in the relationship between AETR and non-resource tax revenue. The results reveal a non-linear effect with a single transition threshold, defining two regimes. In the first regime, AETR has a positive and statistically significant effect on non-resource tax revenues, while in the second regime, its effect becomes negative and remains significant. The estimated thresholds differ according to mine grade, reaching 53.24% for low-grade mines, 49.31% for medium-grade mines, and 33.36% for high-grade mines. These findings suggest that the taxation of gold rents should be calibrated according to mine characteristics: increasing the AETR beyond the estimated thresholds may undermine tax revenue mobilisation from non-resource sectors. Therefore, policymakers should consider mine grade when designing mining tax regimes to balance the capture of resource rents with the preservation of domestic tax revenue from other sectors.