The Dark Side of Transfer Pricing: Its Role in Tax Avoidance and Wealth Retentiveness

In conventional accounting literature, ?transfer pricing? is portrayed as a technique for optimal allocation of costs and revenues amongst divisions, subsidiaries and joint ventures within a group of related entities. Such representations of transfer pricing simultaneously acknowledge and occlude how it is deeply implicated in processes of wealth retentiveness that enable companies to avoid taxes and facilitate the flight of capital. A purely technical conception of transfer pricing calculations abstracts them from the politico-economic contexts of their development and use. The context is the modern corporation in an era of globalized trade and its relationship to state tax authorities, shareholders and other possible stakeholders. Transfer pricing practices are responsive to opportunities for determining values in ways that are consequential for enhancing private gains, and thereby contributing to relative social impoverishment, by avoiding the payment of public taxes. Evidence is provided by examining some of the transfer prices practices used by corporations to avoid taxes in developing and developed economies

The synergistic effect of cigarette taxes on the consumption of cigarettes, alcohol and betel nuts

<p>Abstract</p> <p>Background</p> <p>Consumption of cigarettes and alcoholic beverages creates serious health consequences for individuals and overwhelming financial burdens for governments around the world. In Asia, a third stimulant – betel nuts – increases this burden exponentially. For example, individuals who simultaneously smoke, chew betel nuts and drink alcohol are approximately 123 times more likely to develop oral, pharyngeal and laryngeal cancer than are those who do not.</p> <p>To discourage consumption of cigarettes, the government of Taiwan has imposed three taxes over the last two decades. It now wishes to lower consumption of betel nuts. To assist in this effort, our study poses two questions: 1) Will the imposition of an NT$10 Health Tax on cigarettes effectively reduce cigarette consumption? and 2) Will this cigarette tax also reduce consumption of alcoholic beverages and betel nuts? To answer these questions, we analyze the effect of the NT$10 tax on overall cigarette consumption as well as the cross price elasticities of cigarettes, betel nuts, and alcoholic beverages.</p> <p>Methods</p> <p>To establish the Central Bureau of Statistics demand function, we used cigarette, betel nut, and alcoholic beverage price and sales volume data for the years 1972–2002. To estimate the overall demand price elasticity of cigarettes, betel nuts, and alcoholic beverages, we used a seemingly unrelated regression analysis.</p> <p>Results</p> <p>We find that the NT$10 health tax on cigarettes will reduce cigarette consumption by a significant 27.22$10 health tax on cigarettes will reduce betel nut consumption by 20.07% and alcohol consumption by 7.5%.</p> <p>Conclusion</p> <p>The assessment of a health tax on cigarettes as a smoking control policy tool yields a win-win outcome for both government and consumers because it not only reduces cigarette consumption, but it also reduces betel nut and alcoholic beverage consumption due to a synergistic relationship. Revenues generated by the tax can be used to fund city and county smoking control programs as well as to meet the health insurance system's current financial shortfall.</p

Strategic risk appraisal. Comparing expert- and literature-informed consequence assessments for environmental policy risks receiving national attention

Strategic risk appraisal (SRA) has been applied to compare diverse policy level risks to and from the environment in England and Wales. Its application has relied on expert-informed assessments of the potential consequences from residual risks that attract policy attention at the national scale. Here we compare consequence assessments, across environmental, economic and social impact categories that draw on ‘expert’- and ‘literature-based’ analyses of the evidence for 12 public risks appraised by Government. For environmental consequences there is reasonable agreement between the two sources of assessment, with expert-informed assessments providing a narrower dispersion of impact severity and with median values similar in scale to those produced by an analysis of the literature. The situation is more complex for economic consequences, with a greater spread in the median values, less consistency between the two assessment types and a shift toward higher severity values across the risk portfolio. For social consequences, the spread of severity values is greater still, with no consistent trend between the severities of impact expressed by the two types of assessment. For the latter, the findings suggest the need for a fuller representation of socioeconomic expertise in SRA and the workshops that inform SRA output

What Happened to the Bondholding Class? Public Debt, Power and the Top One Per Cent

In 1887 Henry Carter Adams produced a study demonstrating that the ownership of government bonds was heavily concentrated in the hands of a ‘bondholding class’ that lent to and, in Adams's view, controlled the government like dominant shareholders control a corporation. The interests of this bondholding class clashed with the interests of the masses, whose burdensome taxes financed the interest payments on government bonds. Since the late nineteenth century there has been plenty of debate about the ownership of the public debt. But the empirical evidence offered to support the various arguments has been scant. As a result, political economists have few answers to questions first raised by Adams over century ago: how has the pattern of public debt ownership changed? Can we still speak of a powerful ‘bondholding class’? Does public debt redistribute income from taxpayers to public creditors? This article develops a new framework to address these questions. Anchored within a ‘capital as power’ approach, the research indicates a staggering pattern of concentration in the ownership of US public debt in the hands of the top one per cent of US households over the past three decades. Accordingly, the bondholding class is still alive and well in contemporary US capitalism

Policy making under uncertainty in electric vehicle demand

The introduction of electric vehicles (EVs) into the passenger vehicle market has, in recent years, become viewed as a primary solution to the significant carbon dioxide emissions attributed to personal mobility. Moreover, EVs offer a means by which energy diversification and efficiency can be improved compared to the current system. The UK government and European Commission have played an active role in steering the development and market introduction of EVs. However, a great deal of uncertainty remains regarding the effectiveness of these policies and the viability of EV technology in the mainstream automotive market. This paper investigates the prevalence of uncertainty concerning the demand for EVs. This is achieved through the application of a conceptual framework that assesses the locations of uncertainty. UK and EU documents are assessed through a review of the published policy alongside contributions from academia to determine how uncertainty has been reduced. This assessment offers insights to decision makers in this area by evaluating the work done to date through a landscape analysis. Results have identified six different locations of uncertainty covering: consumer, policy, infrastructure, technical, economic and social issues

The Local Economic Impact of Shale Gas Extraction

Advocates of UK shale gas expansion have focused upon predicted national economic benefits, but local and/or regional impact has been largely neglected. This paper seeks to address this deficit by creating a unique dataset, combining industry data with consumer and supply chain surveys, thereby overcoming the current absence of suitable secondary data. Local economic impact in the Bowland field is estimated via a simple Keynesian local income multiplier model. Results emphasize the importance of facilitating local employment opportunities, through skills initiatives, and development of regional supply chain clusters, to anchor economic benefits within the local economy. Policy implications are discussed

Choice of Tax Base Revisited: Cash Flow vs. Prepayment Approaches to Consumption Taxation

This paper re-examines the issues involved in the design of a direct tax on consumption, an idea that has received a fair degree of acceptance in the transition countries over the past decade (e.g., tax reforms in Croatia and Moldova). First we argue that on the subject of equivalence among a set of taxes, the only meaningful comparison is along the ex-ante concept of equivalence, and not ex-post. The latter as we shall see requires highly implausible, and often arbitrary, choice scenarios. We carry out the analysis in a variety of models starting with the two-period consumption-saving choice under full certainty. However, a good part of the discussion is carried out where the portfolio choice behaviour is embedded in an intertemporal savings model that has been widely discussed in the literature. We then take up more complete (and necessarily more complex) choice situations for examination. Indeed the first of two variations of the above is a model where individuals make work-leisure (for a given skill level) as well as the safe-risky asset choice. The last is of risky human capital choice, where the physical investment is restricted to a single non-risky asset. For the purposes of the paper, the models are very general, and the precise choice context is open to wider interpretations than how they are actually phrased. In spite of our preoccupation with the efficiency aspects, we are interested in other important issues of equity, and those of an administrative nature. But our remarks on the latter fronts are limited to the insight that we directly gain from the analytics