Mining royalty in Ecuador: original patrimonial resource disguised as tax?

Abstract

It is well established that all States need income in order to fulfill their duties, that is why it is relevant to ask where do this income originates from, or with what means do States count in order to obtain it. In the Ecuadorian case, since 2008, exploiting minerals has been considered a viable option to secure income through industrialization of mining activities. Minerals are exclusively owned by the State; however, private parties may co-participate in the benefits of this activity while paying taxes, royalties, patents, and labor profits to the State.

In regards to the mining royalty, the discussion is centered on whether it is a form of tax, or an original patrimonial resource, based on a property right to which the State is the rightholder. This question, considering the economic importance of mining activities, requires an analysis under the light of the public finance theory. In conclusion, in Ecuador presents an ambiguous position between those two concepts, which creates legal and economic disputes.