An analysis of tax expenditure versus direct expenditure

Each financial year concessions, benefits and incentives are delivered to taxpayers via the tax system. These concessions, benefits and incentives, referred to as tax expenditure, differ from direct expenditure because of the recurring fiscal impact without regular scrutiny through the federal budget process. There are approximately 270 different tax expenditures existing within the current tax regime with total measured tax expenditures in the 2005-06 financial year estimated to be around $42.1 billion, increasing to $52.7 billion by 2009-10. Each year, new tax expenditures are introduced, while existing tax expenditures are modified and deleted. In recognition of some of the problems associated with tax expenditure, a Tax Expenditure Statement, as required by the Charter of Budget Honesty Act 1988, is produced annually by the Australian Federal Treasury. The Statement details the various expenditures and measures in the form of concessions, benefits and incentives provided to taxpayers by the Australian Government and calculates the tax expenditure in terms of revenue forgone. A similar approach to reporting tax expenditure, with such a report being a legal requirement, is followed by most OECD countries. The current Tax Expenditure Statement lists 270 tax expenditures and where it is able to, reports on the estimated pecuniary value of those expenditures. Apart from the annual Tax Expenditure Statement, there is very little other scrutiny of Australia’s Federal tax expenditure program. While there has been various academic analysis of tax expenditure in Australia, when compared to the North American literature, it is suggested that the Australian literature is still in its infancy. In fact, one academic author who has contributed to tax expenditure analysis recently noted that there is ‘remarkably little secondary literature which deals at any length with tax expenditures in the Australian context.’ Given this perceived gap in the secondary literature, this paper examines fundamental concept of tax expenditure and considers the role it plays in to the current tax regime as a whole, along with the effects of the introduction of new tax expenditures. In doing so, tax expenditure is contrasted with direct expenditure. An analysis of tax expenditure versus direct expenditure is already a sophisticated and comprehensive body of work stemming from the US over the last three decades. As such, the title of this paper is rather misleading. However, given the lack of analysis in Australia, it is appropriate that this paper undertakes a consideration of tax expenditure versus direct expenditure in an Australian context. Given this proposition, rather than purport to undertake a comprehensive analysis of tax expenditure which has already been done, this paper discusses the substantive considerations of any such analysis to enable further investigation into the tax expenditure regime both as a whole and into individual tax expenditure initiatives. While none of the propositions in this paper are new in a ‘tax expenditure analysis’ sense, this debate is a relatively new contribution to the Australian literature on the tax policy. Before the issues relating to tax expenditure can be determined, it is necessary to consider what is meant by ‘tax expenditure’. As such, part two if this paper defines ‘tax expenditure’. Part three determines the framework in which tax expenditure can be analysed. It is suggested that an analysis of tax expenditure must be evaluated within the framework of the design criteria of an income tax system with the key features of equity, efficiency, and simplicity. Tax expenditure analysis can then be applied to deviations from the ideal tax base. Once it is established what is meant by tax expenditure and the framework for evaluation is determined, it is possible to establish the substantive issues to be evaluated. This paper suggests that there are four broad areas worthy of investigation; economic efficiency, administrative efficiency, whether tax expenditure initiatives achieve their policy intent, and the impact on stakeholders. Given these areas of investigation, part four of this paper considers the issues relating to the economic efficiency of the tax expenditure regime, in particular, the effect on resource allocation, incentives for taxpayer behaviour and distortions created by tax expenditures. Part five examines the notion of administrative efficiency in light of the fact that most tax expenditures could simply be delivered as direct expenditures. Part six explores the notion of policy intent and considers the two questions that need to be asked; whether any tax expenditure initiative reaches its target group and whether the financial incentives are appropriate. Part seven examines the impact on stakeholders. Finally, part eight considers the future of tax expenditure analysis in Australia.

Automated Feedback for 'Fill in the Gap' Programming Exercises

Timely feedback is a vital component in the learning process. It is especially important for beginner students in Information Technology since many have not yet formed an effective internal model of a computer that they can use to construct viable knowledge. Research has shown that learning efficiency is increased if immediate feedback is provided for students. Automatic analysis of student programs has the potential to provide immediate feedback for students and to assist teaching staff in the marking process. This paper describes a “fill in the gap” programming analysis framework which tests students’ solutions and gives feedback on their correctness, detects logic errors and provides hints on how to fix these errors. Currently, the framework is being used with the Environment for Learning to Programming (ELP) system at Queensland University of Technology (QUT); however, the framework can be integrated into any existing online learning environment or programming Integrated Development Environment (IDE)

Bridging the gap between citizens and local authorities via e-government

Among the many promises of the digital revolution is its potential to strengthen social equality and make governments more responsive to the needs of their citizens. E-government is the use of information and communications technologies (ICTs) to transform governments by making them more accessible, effective, accountable, and making the most of the new technologies to deliver better quality and more accessible public services. This paper provides an overview of recent literature addressing e-government issues, and includes a discussion of its implications at the municipal level. It also covers Australian experiences in establishing and managing e-government services.

Impeding good governance implementation in Indonesian regional government : the effect of a bureaucratic generation gap

The implementation of ‘good governance’ in Indonesia’s regional government sector became a central tenet in governance research following the introduction of the national code for governance in 2006. The code was originally drafted in 1999 as a response to the Asian financial crises and many cases of unearthed corruption, collusion, and nepotism. It was reviewed in 2001 and again in 2006 to incorporate relevant political, economical, and social developments. Even though the national code exists along with many regional government decrees on good governance, the extent of implementation of the tenets of good governance in Indonesia’s regional government is still questioned. Previous research on good governance implementation in Indonesian regional government (Mardiasmo, Barnes and Sakurai, 2008) identified differences in the nature and depth of implementation between various Indonesian regional governments. This paper analyses and extends this recent work and explores key factors that may impede the implementation and sustained application of governance practices across regional settings. The bureaucratic culture of Indonesian regional government is one that has been shaped for over approximately 30 years, in particular during that of the Soeharto regime. Previous research on this regime suggests a bureaucratic culture with a mix of positive and negative aspects. On one hand Soeharto’s regime resulted in strong development growth and strong economic fundamentals, resulting in Indonesia being recognised as one of the Asian economic tigers prior to the 1997 Asian financial crises. The financial crises however revealed a bureaucratic culture that was rife with corruption, collusion, and nepotism. Although subsequent Indonesian governments have been committed to eradicating entrenched practices it seems apparent that the culture is ingrained within the bureaucracy and eradication of it will take time. Informants from regional government agree with this observation, as they identify good governance as an innovative mechanism and to implement it will mean a deviation from the “old ways.” Thus there is a need for a “changed” mind set in order to implement sustained governance practices. Such an exercise has proven to be challenging so far, as there is “hidden” resistance from within the bureaucracy to change its ways. The inertia of such bureaucratic cultures forms a tension against the opportunity for the implementation of good governance. From this context an emergent finding is the existence of a ‘bureaucratic generation gap’ as an impeding variable to enhanced and more efficient implementation of governance systems. It was found that after the Asian financial crises the Indonesian government (both at national and regional level) drew upon a wider human resources pool to fill government positions – including entrants from academia, the private sector, international institutions, foreign nationals and new graduates. It suggested that this change in human capital within government is at the core of this ‘inter-generational divide.’ This divergence is exemplified, at one extreme, by [older] bureaucrats who have been in-position for long periods of time serving during the extended Soeharto regime. The “new” bureaucrats have only sat in their positions since the end of Asian financial crisis and did not serve during Soeharto’s regime. It is argued that the existence of this generation gap and associated aspects of organisational culture have significantly impeded modernising governance practices across regional Indonesia. This paper examines the experiences of government employees in five Indonesian regions: Solok, Padang, Gorontalo, Bali, and Jakarta. Each regional government is examined using a mixed methodology comprising of on-site observation, document analysis, and iterative semi-structured interviewing. Drawing from the experiences of five regional governments in implementing good governance this paper seeks to better understand the causal contexts of variable implementation governance practices and to suggest enhancements to the development of policies for sustainable inter-generational change in governance practice across regional government settings.

A45 ICT curriculum design to bridge the gap between industry and academia

Building Information Model (BIM) software, collaboration platforms and 5D Construction Management software is now commercially available and presents the opportunity for construction project teams to design more cost effectively, plan construction earlier, manage costs throughout the life cycle of a building project and provide a central asset management register for facilities managers. This paper outlines the merits of taking a holistic view of ICT in curriculum design. The educational barriers to implementation of these models and planning tools are highlighted. Careful choice of computer software can make a significant difference to how quickly students can master skills; how easy it is to study and how much they enjoy learning and be prepared for employment. An argument for BIM and 5D planning tools to be introduced into the curriculum to assist industry increase productivity and efficiencies are outlined by the authors.

Measuring the managerial benefits of tax compliance : a fresh approach

Managerial benefits of tax compliance have been identified by many authors in the tax compliance costs literature; they have however often been ignored when measuring the net effect of tax compliance on business taxpayers because it was believed that the measurement of such benefits was impossible or difficult. This paper first discusses the theoretical issues surrounding the valuation of managerial benefits, including the related tax/ accounting costs overlap problem; it then proposes a fresh approach for measuring managerial benefits. The proposed measurement model incorporates a subjective evaluation of useful accounting information by owner‑managers and objective measurements of accounting costs. Two main components of managerial benefits are identified: the incremental value of managerial accounting information and the savings on reporting costs. A study of small businesses conducted in late 2006, compared accounting practices between tax complying entities (TCEs) and tax compliance free entities (TFEs) and investigated how accounting information was valued by owner-managers in TCEs. The research adopted a mixed methodological design including a major quantitative phase followed by a minor qualitative phase. The results show that while a vast majority of TFEs maintained basic accounting functions, record keeping requirements imposed by tax compliance led to the implementation of more sophisticated accounting systems in TCEs. It was also found that TCE owner-managers assigned a relatively significant value to the managerial accounting information that is generated as a result of record keeping imposed by tax compliance, suggesting that substantial managerial benefits might be derived.