Taxation of multinational banks : using formulary apportionment to reflect economic reality (Part 1)

Formulary apportionment does not attempt to undertake a transactional division of a highly integrated multinational entity. Rather, it allocates income to the jurisdictions based on an economically justifiable formula. Opposition to formulary apportionment is generally based on the argument that it is not a theoretically superior (or optimal) model because of the implementation difficulties. The conclusion that the unitary taxation model may be theoretically superior to the current arm's-length model that applies to multinational banks, despite significant implementation, compliance, and enforcement issues, is based on the unitary taxation model providing greater alignment with the unique features of these banks. The formulary apportionment model looks to the economic substance of the multinational entity and, in this sense, adopts a substance-over- form approach. Formulary apportionment further recognizes the impossibility of using arm's-length pricing for economically interdependent multinational entities. A final advantage to formulary apportionment, which is also a consequence of this model achieving greater inter-nation equity, is the elimination of double taxation.

The implementation of social and economic policy through the tax regime : a review of Australia's tax expenditures program

Each year the Australian Federal Treasury releases its Tax Expenditures Statement providing details of concessions, benefits, and incentives delivered through the tax regime to Australian taxpayers. The current Tax Expenditures Statement, released on 25 January 2008, lists approximately 300 tax expenditures and reports on the estimated pecuniary value in terms of revenue foregone, estimated to be a total of $50.12 billion for the 2006-07 financial year. Apart from the annual Tax Expenditures Statement, and despite the recurring fiscal impact, there is very little other scrutiny of Australia’s Federal tax expenditures program. This is despite tax expenditures often being seen as an alternative to direct expenditures with similar impact on the Federal budget. The object of tax expenditures is to provide government assistance and meet government objectives, and, as such, tax expenditures are departures from the revenue raising aspect of the tax regime. Within this context, this article examines the fundamental concept of tax expenditures as contrasted with direct expenditures and considers the role they play in the current tax regime.

The taxation of multinational banks : alternative apportionment through a unitary taxation regime aligning with economic reality

The taxation of multinational banks currently is governed by the general principles of international tax. However, it is arguable that there are characteristics exclusive to multinational banks that may warrant the consideration of a separate taxing regime. This article argues that because of the unique nature of multinational banks, the traditional international tax rules governing jurisdiction to tax and allocation of income do not produce a result which is optimal, as it does not reflect economic reality. That is, the current system does not produce a result that accurately reflects the economic source of the income or the location of the economic activity. The suggested alternative is unitary taxation using global formulary apportionment. Formulary apportionment is considered as an alternative that reflects economic reality by recognising the unique nature of multinational banks and allocating the income to the location of the economic activity. The unique nature of multinational banking is recognised in the fact that formulary apportionment does not attempt to undertake a transactional division of a highly integrated multinational entity. Rather, it allocates income to the jurisdictions based on an economically justifiable formula. Starting from this recognition, the purpose of this article is to demonstrate that formulary apportionment is a theoretically superior (or optimal) model for the taxation of multinational banks. An optimal regime, for the purposes of this article, is considered to be one that distributes the taxing rights in an equitable manner between the relevant jurisdictions, while, simultaneously allowing decisions of the international banks to be tax neutral. In this sense, neutrality is viewed as an economic concept and equity is regarded as a legal concept. A neutral tax system is one in which tax rules do not affect economic choices about commercial activities. Neutrality will ideally be across jurisdictions as well as across traditional and non-traditional industries. The primary focus of this article is jurisdictional neutrality. A system that distributes taxing rights in an equitable manner between the relevant jurisdictions ensures that each country receives its fair share of tax revenue. Given the increase in multinational banking, jurisdictions should be concerned that they are receiving their fair share. Inter-nation equity is concerned with re-determining the proper division of the tax base among countries. Richard and Peggy Musgrave argue that sharing of the tax base by countries of source should be seen as a matter of inter-nation equity requiring international cooperation. The rights of the jurisdiction of residency will also be at issue. To this extent, while it is agreed that inter-nation equity is an essential attribute to an international tax regime, there is no universal agreement as to how to achieve it. The current system attempts to achieve such equity through a combined residency and source regime, with the transfer pricing rules used to apportion income between the relevant jurisdictions. However, this article suggests, that as an alternative to the current regime, equity would be achieved through formulary apportionment. Opposition to formulary apportionment is generally based on the argument that it is not a theoretically superior (or optimal) model because of the implementation difficulties. Yet these are two separate issues. As such, this article is divided into two core parts. The first part examines the theoretical soundness of the formulary apportionment model concluding that it is theoretically superior to the arm’s length pricing requirement of the traditional transfer pricing regime. The second part examines the practical implications of accepting formulary apportionment as an optimal model with a view to disclosing the issues that arise when a formulary apportionment regime is adopted. Prior to an analysis of the theoretical and practical application of formulary apportionment to multinational banks, the unique nature of these banks is considered. The article concludes that, while there are significant implementation, compliance, and enforcement issues to overcome, the unitary taxation model may be theoretically superior to the current arm’s length model which applies to multinational banks. This conclusion is based on the unitary taxation model providing greater alignment with the unique features of these banks.

Taxation of multinational banks : using formulary apportionment to reflect economic reality (Part 2)

As stated in Part 1 of this article, formulary appointment does not attempt to undertake a transactional division of a highly integrated multinational entity; rather, it allocates income to the jurisdictions based on economically justifiable formula. This article argues that the unitary taxation model is superior to the current arms-lenght model for the taxation of multinational banks despite significant implementation, complicance and enforcement issues. Part one of the article gave some background on the taxation of multinational banks, followed by a discussion of their uniqueness, and the theoretical benefits of the unitary tax model for multinational banking. Part 2 below covers the practical implications of accepting formulary apportionment as an 'optimal' regime for taxing multinational banks.

Economic fluctuations and productivity in the Malaysian construction sector

Growth in productivity is the key determinant of the long-term health and prosperity of an economy. The construction industry being one of major strategic importance, its productivity performance has a significant effect on national economic growth. The relationship between construction output and economy has received intensive studies, but there is lack of empirical study on the relationship between construction productivity and economic fluctuations. Fluctuations in construction output are endemic in the industry. In part they are caused by the boom and slump of the economy as a whole and in part by the nature of the construction product. This research aims to uncover how the productivity of construction sector is influenced in the course of economic fluctuations in Malaysia. Malaysia has adopted three economic policies – New Economic Policy (1971-1990), National Development Policy (1991-2000) and the National Vision Policy (2001-2010) since gaining independence in 1959. The Privatisation Master Plan was introduced in 1991. Operating within this historical context, the Malaysian construction sector has experienced four business cycles since 1960. A mixed-method design approach is adopted in this study. Quantitative analysis was conducted on the published official statistics of the construction industry and the overall economy in Malaysia between 1970 and 2009. Qualitative study involved interviews with a purposive sample of 21 industrial participants. This study identified a 32-year long building cycle appears in 1975-2006. It is superimposed with three shorter construction business cycles in 1975-1987, 1987-1999 and 1999-2006. The correlations of Construction labour productivity (CLP) and GDP per capita are statistically significant for the 1975-2006 building cycle, 1987-1999 and 1999-2006 construction business cycles. It was not significant in 1975-1987 construction business cycles. The Construction Industry Surveys/Census over the period from 1996 to 2007 show that the average growth rate of total output per employee expanded but the added value per employee contracted which imply high cost of bought-in materials and services and inefficient usage of purchases. The construction labour productivity is peaked at 2004 although there is contraction of construction sector in 2004. The residential subsector performed relatively better than the other sub-sectors in most of the productivity indicators. Improvements are found in output per employee, value added per employee, labour competitiveness and capital investment but declines are recorded in value added content and capital productivity. The civil engineering construction is most productive in the labour productivity nevertheless relatively poorer in the capital productivity. The labour cost is more competitive in the larger size establishment. The added value per labour cost is higher in larger sized establishment attributed to efficient in utilization of capital. The interview with the industrial participant reveals that the productivity of the construction sector is influenced by the economic environment, the construction methods, contract arrangement, payment chain and regulatory policies. The fluctuations of construction demand have caused companies switched to defensive strategy during the economic downturn and to ensure short-term survival than to make a profit for the long-term survival and growth. It leads the company to take drastic measures to curb expenses, downsizing, employ contract employment, diversification and venture overseas market. There is no empirical evidence supports downsizing as a necessary step in a process of reviving productivity. The productivity does not correlate with size of firm. A relatively smaller and focused firm is more productive than the larger and diversified organisation. However diversified company experienced less fluctuation in both labour and capital productivity. In order to improve the productivity of the construction sector, it is necessary to remove the negatives and flaws from past practices. The recommended measures include long-term strategic planning and coordinated approaches of government agencies in planning of infrastructure development and to provide regulatory environments which encourage competition and facilitate productivity improvement.

Youth alcohol and drug good practice guide 1 : a framework for youth alcohol and other drug practice

This Guide outlines a framework for working with young people whose AOD use creates significant vulnerability to current or future harm. The target audience is practitioners who work with young people who have problematic AOD use and the managers of these practitioners. Areas of content include the elements of a framework for AOD practice, an appreciation of the developmental, social and institutional location of young people, key concepts and understandings regarding good youth centered context responsive practice, and key policy constructs and directions.

Redland city youth and public space report : provisions for good practice

Written for Redland City Council in collaboration with the Capalaba Stakeholders Group. The provisions detailed in this report constitute a protocol agreement developed through the Capalaba Stakeholders Group between 2009 and 2011 around young people and public spaces in Redland City, Queensland. These provisions include agreed principles, standards and responses to tensions or unacceptable behaviour, how various tensions and problems can be resolved in constructive ways and how people, including young people can work together to make a public or community accessed space safe and accessible. It is based on the recognition that young people are part of the community and that strategies to resolve tensions that arise should be inclusive and employ a mixed methods approach.

Digitisation of books in Australia for the public good

The National Cultural Policy (NCP) Discussion Paper highlights that the ‘National Broadband Network, with its high-speed broadband, will enable new opportunities for developing and delivering Australian content and applications reflecting our diverse culture and interests’.1 A significant source of content and knowledge is our books, in particular, out of print, in copyright books and books in the public domain. More and more people, especially those who are digitally literate, will demand that the store of knowledge in these hard-to-find (and at times, decaying) books be digitised and made readily accessible on the internet...

Development of a good practice guide to safeguard student learning engagement

This paper reports on the development of a good practice guide that will offer the higher education sector a framework for safeguarding student learning engagement. The good practice guide and framework are underpinned by a set of principles initially identified as themes in the social justice literature which were refined following the consolidation of data collected from eight selected “good practice” Australasian universities and feedback gathered at various forums and presentations. The good practice guide will provide the sector with examples of institutional wide efforts which respond to national priorities for student retention and will also provide exemplars of institutional practices for each principle to facilitate the uptake of sector-wide good practice. Participants will be provided with the opportunity to discuss the social justice principles, the draft good practice guide and identify the practical applications of the guide within individual institutions.

Good Practice Report : Curriculum Renewal

This good practice report, commissioned by the ALTC, provides a summative evaluation of useful outcomes and good practices from ALTC projects and fellowships on curriculum renewal. The report contains: -a summative evaluation of the good practices and key outcomes for teaching and learning from completed ALTC projects and fellowships -a literature review of the good practices and key outcomes for teaching and learning from national and international research -the proposed outcomes and resources for teaching and learning which will be produced by current incomplete ALTC projects and fellowships -identifies areas in which further work or development are appropriate.

Autonomy versus futility? Barriers to good clinical practice in end-of-life care : a Queensland case

Findings from a Queensland coronial inquest highlight the complex clinical, ethical and legal issues that arise in end-of-life care when clinicians and family members disagree about a diagnosis of clinical futility. The tension between the law and best medical practice is highlighted in this case, as doctors are compelled to seek family consent to not commence a futile intervention. Good communication between doctors and families, as well as community and professional education, is essential to resolve tensions that can arise when there is disagreement about treatment at the end of life.

Something rotten in the state of Minnesota: or the morality of backwoodsmen: 'A Simple Plan'

'A Simple Plan' is a deceptively complex and multilayered film, combining elements of Celtic mythology with the morality play and the windfall fantasy gone disastrously wrong. Despite its blending of realism and heavyhanded symbolism, and its abundant trans-textual gestures, 'A Simple Plan' is in many ways defiantly not a 90s movie: its leading characters are fashionably flawed, but they are neither sensitive, nor honourable, nor heroic; there are no startling special effects or intricate timeshifts; and it desperately gives the impression of depth, of being emphatically more than mere superficial excess. At a stretch it almost appears to be a throwback to the 1930s Production Code emphasis on the role of cinema in moral instruction; while good hardly triumphs over evil, venality is painfully and emphatically punished. But in other ways it is a quintessential late 90s film: an American/British/Japanese/German/French co-production, 'A Simple Plan' acts most palpably as a commentary on the moral, economic and social condition of the United States at the end of the American century.

Health Workforce Governance: Improved Access, Good Regulatory Practice, Safer Patients

With increasing recognition of the international market in health professionals and the impact of globalism on regulation, the governance of the health workforce is moving towards greater public engagement and increased transparency. This book discusses the challenges posed by these processes, such as improved access to health services and how structures can be reformed so that good practice is upheld and quality of service and patient safety are ensured.

Environmental law and the economic impact on Australian firms

In response to international awareness of environmental issues and the inadequacies of common law actions, legislation has been enacted by Australian governments to facilitate environmental protection. The Environmental Protection Act 1994 (Qld) and accompanying Environmental Protection (Interim) Regulation 1995 (Qld) is one example of government response to mounting public pressure to legislate for the environment. Investigation into the operation of the legislation exposes the costs faced by Australian firms in its application. The legislation identifies a number of environmentally relevant activities and imposes licensing and reporting requirements on firms undertaking such activities. In view of these legislative requirements and the increasing public awareness of environmental issues over the last decade in Australia, it could be expected that firms undertaking environmentally sensitive activities will place greater importance on the management of environmental issues. If so, the greater prominence placed on environmental management may be reflected in disclosures made by the firm to its shareholders and other interested parties. This article investigates the type and extent of costs currently imposed by the body of environmental laws in Australia with the discussion primarily focusing upon costs imposed due to the operation of environmental legislation in Queensland. Further, the article reports empirical analysis of management response to environmental issues where firms are undertaking environmentally sensitive activities.