Outer Space Tax

Nothing serious, just an intriguing proposal

To fully enjoy reading this post, listen to Space Cowboy by Jamiroquai.

In the last two blog entries on asteroids, we went through many topics: past events, scientific discoveries, exploration missions. In the following we will see instead something hypothetical,an idea about how to share the resources contained in our beloved space rocks among all mankind.

This Blog’s Space for Earth section is about the contribution of Outer Space towards the achievement of each of the UN Sustainable Development Goals (SDGs). You can also find some of the possible future benefits to the SDGs, underlining further the strong link between space exploitation and Earth’s natural environment restoration. In the following, we will give a deeper look at one interesting potential contribution: how the wealth deriving from space resource mining activities could accelerate the achievement of goals like SDG 1 “No Poverty” and SDG 2 “Zero Hunger”.
Basically, how could this idea be implemented? We should start looking at what is already available about space resource utilization in terms of general principles. The widely accepted UN Outer Space Treaty introduces an important concept: “the use of outer space shall be carried out for the benefit and in the interests of all countries”. This is stated even more strongly in the UN Moon Agreement, affirming that space resources “are the common heritage of mankind”. In a sense, these two similar principles mean that the wealth generated by space exploitation should be shared between all countries, no one excluded.
This matter is not at all easy to handle, since only a part of the resources in the asteroid belt could be worth trillions of dollars and, as a consequence, they could generate serious issues in the world economy, even worsening the actual situation. A potential solution could be to introduce a tax system, following the way mining companies are paying the countries to exploit the natural resources. We could call it simply “Outer Space Tax”. This framework should include not only mining licenses, but also a set of royalties based on the kind and the quantity of the extracted materials.
Introducing such a tax mechanism would have two positive consequences. On the one hand, the price of resources mined in space could be controlled not to ruin the existing raw material market and the world economy. On the other hand, such taxes could generate a big chunk of money to sustain the SDGs mentioned above, finally sharing the wealth generated by space resources with all humanity.
Who or what should handle such a huge bureaucratic and economic power? As advocated by the Moon Agreement itself, it should be an “international regime”, acting in the name of all mankind and of all the nations. What could be better than the United Nations themselves? Instead of creating a new entity, an interesting choice could be to empower the UN Office of Outer Space Affairs (UNOOSA), which is already dealing with many space programs and related initiatives. It would be a matter of enhancing its structure, establishing its rights to collect taxes from entities engaged in space mining activities, and enabling it to monitor these activities in space.
Another important question is about the management of this huge amount of money which should not enrich the usual elites. It should enable the SDG Action Plan implementation instead. A possible way forward could be to channel all the proceeds directly towards the various UN programs and agencies, like UNICEF, feeding the SDGs initiatives without intermediaries. It would be important to avoid giving money directly to local governments, and elude possible difficulties related to benefits reaching the population and the natural environment’s restoration. Should politicians be involved at national level? Clearly it won’t be possible to take local actions without their involvement, however UN agencies should hold firmly the purse strings.
About timing, in the first stages the “Outer Space tax” mechanism could be used to track the activities, issuing licenses at little cost for a limited time, until the space mining business picks up. After that and according to its development, licenses and royalties should then be applied. In particular, royalties should relate first to space resources brought to the Earth, so that they can be easily classified and quantified, leaving free the in situ utilization of space resources. This will avoid adding costs to the first space constructions, already expensive as such. When the space construction business also becomes economically profitable, the Outer Space tax should then be applied to all mined space resources. At that stage, UNOOSA would have its own “space force”, a kind of cosmic Blue Helmets, to control space activities and apply the agreed rules.

This general concept could be extended from materials collected in space to all the possible resources available in space for commercial purposes. For example, a tax system could be applied to allow a spacecraft to occupy a specific orbit around the Earth. It could be similar to the one used to regulate the telecommunication frequencies (3G, 4G, 5G). The license could give the owner of the spacecraft the right to occupy an orbit and money earned from it could fuel the SDGs program. This mechanism could also have the possible interesting side effect to mitigate the space debris problem: if a company had to pay money to occupy an orbit for a spacecraft no longer operational, it would be really interested in its removal. Even more, if the spacecraft were to occupy an unauthorized orbit, a penalty could be applied and, once again, the company would have the right motivation to actively work for its displacement. In the end, it would help to regulate the use of Earth’s orbit, avoiding unpleasant overcrowding effects and mitigating the risk of collisions, which is actually not negligible at all.

Coming back to the main topic, nowadays space mining is hardly an engineering exercise, with many scientific studies, private and public initiatives underway, and it is obviously far from being an economic ecosystem. At this pioneering stage, it is more an investment, receiving public money through the national space agencies, than a wealth generator. However, the technology will develop quickly and soon spacecrafts will be wandering in space hither and thither to mine asteroids. This is why we should now start to think about the set of rules for the exploitation of space, starting from the general principles already agreed by the world nations. Leaving the field to the single nations or companies’ initiatives could definitely materialize the risk of transforming Outer Space in the new Far West, instead of providing benefits to all mankind.

Maybe this idea is too simple, or inapplicable. Maybe there are important aspects still to be taken into consideration, since these are just the thoughts of an average individual with no expertise in international law or in tax law. However, the need of set new rules for the new space world is there and it is increasingly important every day. In the end, we should become Spacepolitans, not space cowboys, shouldn’t we?