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.

An attack on Iran: the legal basis, or lack thereof

Talk of a possible Israeli strike on Iran’s nuclear facilities has re-ignited debate over the right of self-defence under international law. Some academics, including Anthony D'Amato and Alan Dershowitz, have claimed that an attack on Iran would be a permissible act of self-defence. Others, such as Kevin Jon Heller, argue that such action would be a clear breach of international law. So, who is correct? Would military action against Iran be legal or illegal?

Non-Governmental Organisations(NGOs) in Bangladesh : an assessment of their legal status

Despite multiple efforts, the amount of poverty in Bangladesh has remained alarmingly high by any standard. Two salient characteristics of poverty alleviation in Bangladesh are: their poor accessibility for the ‘target’ population (the rural poor), and lack of co-ordination between government and the Non-Government Organisations. The moment the state alone is unable to combat poverty then the NGOs come into the picture to fill the void. First Britain as a colonial power, then the East Pakistan Government and the Government of Bangladesh have promulgated Ordinances and Regulations for the practical regulation of NGOs. The loopholes and flaws within the legal framework have given the NGOs opportunities to violate the Ordinances and Regulations. A better situation could be achieved by modifying and strictly implementing such state rules, ensuring accountability, effective state control, and meaningful NGO-State collaboration and co-operation.

Becoming a 'Bastion Against Tyranny' : Australian legal education and the government of the self

Research into legal education suggests that many students enter law school with ideals about using the law to achieve social change, but graduate with some cynicism regarding these ideals. It is often argued that law schools provide a negative, competitive, and conservative environment for students, pushing many away from social justice ideals towards more self-interested, vocational concerns. This article uses Michel Foucault’s work on the government of the self to suggest another way of understanding this process. It examines a range of prescriptive texts that provide students with advice about how to study law and ‘survive’ law school. In doing so, it posits that this apparent loss of social ideals does not necessarily always signify that the student has become politically conservative or has had a negative educational experience. While these legal personae may appear outwardly conservative, and indeed still reflect particular gendered or raced perspectives, by examining the messages that these texts offer students, this article suggests that an apparent loss of social ideals can be the result of a productive shaping of the self. The legal persona they fashion can incorporate social justice ideals and necessitate specific ways of acting on those ideals. This analysis adds to the growing body of research that uses Foucault’s work to rethink common narratives of power and the shaping of the self in legal education, and provides legal educators with new ways of reflecting on the effects of legal education.

Legal education and the 'idealistic student': using Foucault to unpack the critical legal narrative

It appears that few of the students holding ‘socially idealistic’ goals upon entering law school actually maintain these upon graduation. The critical legal narrative, which explains and seeks to act upon this shift in the graduate’s ‘legal identity’, posits that these ideals are repressed through power relations that create passive receptacles into which professional ideologies can be deposited, in the interests of those advantaged by the social and legal status quo. Using the work of Michel Foucault, this paper unpacks the assumptions underpinning this narrative, particularly its arguments about ideology, power, and the subject. In doing so, it will argue this narrative provides an untenable basis for political action within legal education. By interrogating this narrative, this paper provides a new way of understanding the construction of the legal identity through legal education, and a new basis for political action within law school.

Power in legal education : a (new) critical and analytical approach

This article explores power within legal education scholarship. It suggests that power relations are not effectively reflected on within this scholarship, and it provokes legal educators to consider power more explicitly and effectively. It then outlines in-depth a conceptual and methodological approach based on Michel Foucault’s concept of ‘governmentality’ to assist in such an analysis. By detailing the conceptual moves required in order to research power in legal education more effectively, this article seeks to stimulate new reflection and thought about the practice and scholarship of legal education, and allow for political interventions to become more ethically sensitive and potentially more effective.

The traditional rationale of the arm’s length approach to transfer pricing : should the separate accounting model be maintained for modern multinational entities?

This article examines the current transfer pricing regime to consider whether it is a sound model to be applied to modern multinational entities. The arm's length price methodology is examined to enable a discussion of the arguments in favour of such a regime. The article then refutes these arguments concluding that, contrary to the very reason multinational entities exist, applying arm's length rules involves a legal fiction of imagining transactions between unrelated parties. Multinational entities exist to operate in a way that independent entities would not, which the arm's length rules fail to take into account. As such, there is clearly an air of artificiality in applying the arm's length standard. To demonstrate this artificiality with respect to modern multinational entities, multinational banks are used as an example. The article concluded that the separate entity paradigm adopted by the traditional transfer pricing regime is incongruous with the economic theory of modern multinational enterprises.

Report on Legal Expenses Insurance, 239 pages; Prepared for the Access to Justice Committee Queensland Law Society Inc.; Access to Justice Committee, Australian Law Society (23 May, 2002).

A report prepared for the Access to Justice Committee Queensland Law Society Inc.

Youth alcohol and drug practice guide 2: Legal and ethical dimensions of practice

This Guide is designed to assist workers better understand the and negotiate the complex interplay of ethical, legal and organisational considerations in their practice. The goal is to provide frontline workers and managers with information, questions and principles which promote good youth AOD practice. Legal information provided relates to Queensland, Australia.

Reflective practice as a tool for addressing high levels of psychological distress in Australian law schools and the legal profession

This paper discusses: -The need for law schools to use curriculum as a site for positive interventions to support student psychological well-being. -The potential for law school interventions to impact on the psychological well-being of the profession. -Reflective practice as a possible tool for promoting psychological well-being in law school and the profession because it provides a way of coping with ‘indeterminate zones’ of experience.