Commodity taxation and parallel imports

We examine the interaction between commodity taxes and parallel imports in a two-country model with imperfect competition. While governments determine non-cooperatively their commodity tax rate, the volume of parallel imports is determined endogenously by the retailing sector. We compare the positive and normative implications of having commodity taxes based on destination or origin principle. We show that, as the volume of parallel imports increases, non-cooperative origin taxes converge, while destination taxes diverge. Moreover, origin taxes are more similar and lead to higher aggregate welfare levels than destination taxes.

Company taxation and tax spillovers: Separate accounting versus formula apportionment

It is observed in the real world that taxes matter for location decisions and that multinationals shift profits by transfer pricing. The US and Canada use so-called formula apportionment (FA) to tax corporate income, and the EU is debating a switch from separate accounting (SA) to FA. This paper develops a theoretical model that compares basic properties of FA to SA. The focal point of the analysis is how changes in tax rates affect capital formation, input choice, and transfer pricing, as well as on spillovers on tax revenue in other countries. The analysis shows that a move from SA to FA will not eliminate such spillovers and will, in cases identified in the paper, actually aggravate them.

Measuring tax efficiency: A tax optimality index

This paper introduces an index of tax optimality that measures the distance of some current tax structure from the optimal tax structure in the presence of public goods. This index is defined on the [0, 1] interval and measures the proportion of the optimal tax rates that will achieve the same welfare outcome as some arbitrarily given initial tax structure. We call this number the Tax Optimality Index. We also show how the basic methodology can be altered to derive a revenue equivalent uniform tax, which measures the tax burden implied by the public sector. A numerical example is used to illustrate the method developed, and extensions of the analysis to handle models with multiple households and nonlinear taxation structures are undertaken.

Optimal foreign aid and tariffs

This paper investigates the optimal choice of foreign aid when trade policies are decided in a non-cooperative fashion. Three alternative scenarios, depending on the timing of the actions and on whether aid is tied, are analyzed. It is shown that, in the case where aid is decided before tariffs, untied aid can lead to the reduction of the recipient's optimal trade tax. When the donor can tie the aid to a reduction in the recipient's tariff, the optimal aid level is always positive and the world can always achieve a Pareto-efficient equilibrium.

Transfer pricing rules and competing governments

The literature on the regulation of multinationals' transfer prices has not considered the possibility that governments may use transfer pricing rules strategically when they compete with other governments. The present paper analyses this case and shows that, even in the absence of agency considerations, a non‐cooperative equilibrium is characterised by above‐optimal levels of effective taxation. We then derive conditions under which harmonization of transfer pricing rules lead to a Pareto improvement, and show that harmonization according to the ‘arm's length’ principle—the form of harmonization advocated by the OECD—may not be Pareto improving.

Optimal production resource reallocation for CO2 emissions reduction in manufacturing sectors

To mitigate the effects of climate change, countries worldwide are advancing technologies to reduce greenhouse gas emissions. This paper proposes and measures optimal production resource reallocation using data envelopment analysis. This research attempts to clarify the effect of optimal production resource reallocation on CO2 emissions reduction, focusing on regional and industrial characteristics. We use finance, energy, and CO2 emissions data from 13 industrial sectors in 39 countries from 1995 to 2009. The resulting emissions reduction potential is 2.54 Gt-CO2 in the year 2009, with former communist countries having the largest potential to reduce CO2 emissions in the manufacturing sectors. In particular, basic material industry including chemical and steel sectors has a lot of potential to reduce CO2 emissions.

Principles of Taxation Law [9th Edition]

"Taxation law can be an incredibly complex subject to absorb, particularly when time is limited. Written specifically for students, Principles of Taxation Law 2016 brings much needed clarity to this area of law. Utilising many methods to make this often daunting subject achievable, particular features of the 2016 edition include: - seven parts: overview and structure, principles of income, deductions and offsets, timing issues, investment and business entities, tax avoidance and administration, and indirect taxes; - clearly structured chapters within those parts grouped under helpful headings; - flowcharts, diagrams and tables, end of chapter practice questions, and case summaries; - an appendix containing all of the up to date and relevant rates; and - the online self-testing component mentor, which provides questions for students of both business and law; Every major aspect of the Australian tax system is covered, with chapters on topics such as goods and services tax, superannuation, offsets, partnerships, capital gains tax, trusts, company tax, tax administration and state taxes."--Publisher Website