Tax Effects upon Oil Field Development in Venezuela
Important reforms have been made to the oil sector tax code in Venezuela. Given its diversity of oil resources, there was a concern that some resources were not being exploited because of the structure of the tax code. This paper uses traditional theoretical models to review these reforms. Then, a panel of 821 Venezuelan oil fields was used to estimate the effects of the reforms. The major conclusion reached is that reforms based on the development of marginal fields that will not produce because of the tax structure-may overlook the distortions generated by the tax system in non-marginal fields, distortions that can be greater than is the case in marginal fields.