Transfer pricing and multinational financial institutions : the case for replacing arm’s length price with a unitary approach

The international tax system, designed a century ago, has not kept pace with the modern multinational entity rendering it ineffective in taxing many modern businesses according to economic activity. One of those modern multinational entities is the multinational financial institution (MNFI). The recent global financial crisis provides a particularly relevant and significant example of the failure of the current system on a global scale. The modern MNFI is increasingly undertaking more globalised and complex trading operations. A primary reason for the globalisation of financial institutions is that they typically ‘follow-the-customer’ into jurisdictions where international capital and international investors are required. The International Monetary Fund (IMF) recently reported that from 1995-2009, foreign bank presence in developing countries grew by 122 per cent. The same study indicates that foreign banks have a 20 per cent market share in OECD countries and 50 per cent in emerging markets and developing countries. Hence, most significant is that fact that MNFIs are increasingly undertaking an intermediary role in developing economies where they are financing core business activities such as mining and tourism. IMF analysis also suggests that in the future, foreign bank expansion will be greatest in emerging economies. The difficulties for developing countries in applying current international tax rules, especially the current traditional transfer pricing regime, are particularly acute in relation to MNFIs, which are the biggest users of tax havens and offshore finance. This paper investigates whether a unitary taxation approach which reflects economic reality would more easily and effectively ensure that the profits of MNFIs are taxed in the jurisdictions which give rise to those profits. It has previously been argued that the uniqueness of MNFIs results in a failure of the current system to accurately allocate profits and that unitary tax as an alternative could provide a sounder allocation model for international tax purposes. This paper goes a step further, and examines the practicalities of the implementation of unitary taxation for MNFIs in terms of the key components of such a regime, along with their their implications. This paper adopts a two-step approach in considering the implications of unitary taxation as a means of improved corporate tax coordination which requires international acceptance and agreement. First, the definitional issues of the unitary MNFI are examined and second, an appropriate allocation formula for this sector is investigated. To achieve this, the paper asks first, how the financial sector should be defined for the purposes of unitary taxation and what should constitute a unitary business for that sector and second, what is the ‘best practice’ model of an allocation formula for the purposes of the apportionment of the profits of the unitary business of a financial institution.

The impacts of exchange rate volatility on vegetable trade flows

Trade flows of commodities are generally affected by the principles of comparative advantage in a free trade. However, trade flows might be enhanced or distorted not only by various government interventions, but also by exchange rate fluctuations among others. This study applies a commodity-specific gravity model to selected vegetable trade flows among Organization for Economic Co-operation and Development (OECD) countries to determine the effects of exchange rate uncertainty on the trade flows. Using the data from 1996 to 2002, the results show that, while the exchange rate uncertainty significantly reduces trade in the majority of commodity flows, there is evidence that both short- and long-term volatility have positive effect on trade flows of specific commodities. This study also tests the regional preferential trade agreements such as the North American Free Trade Agreement (NAFTA), the Asia-Pacific Economic Cooperation (APEC) and the EU, and their different effects on commodities.

Does energy substitution affect carbon dioxide emissions : income relationship?

Considerable discussion has taken place during the last decade regarding the role of economic growth in determining environmental quality. Using data from 30 OECD countries for the period 1960-2003 and the nonparametric method of generalized additive models, which enables us to use flexible functional forms, this paper examines the environmental Kuznets curve hypothesis for carbon dioxide (CO2). We find that the reduction of coal share in energy use has a significant effect on CO2. Our results imply that economic growth is not sufficient to decrease CO2 emissions.

Does trade openness improve environmental quality?

The literature on trade openness, economic development, and the environment is largely inconclusive about the environmental consequences of trade. This study treats trade and income as endogenous and estimates the overall impact of trade openness on environmental quality using the instrumental variables technique. We find that whether or not trade has a beneficial effect on the environment varies depending on the pollutant and the country. Trade is found to benefit the environment in OECD countries. It has detrimental effects, however, on sulfur dioxide (SO2) and carbon dioxide (CO2) emissions in non-OECD countries, although it does lower biochemical oxygen demand (BOD) emissions in these countries. We also find the impact is large in the long term, after the dynamic adjustment process, although it is small in the short term.

Public sector change, person-organization fit, and work attitudes : a mediation model

Organizational change is a typical phenomenon within public sector agencies in OECD countries. An increasing number of studies in the literature examine the implementation of change and its resulting impact on the work attitudes of public sector employees; however, little is known about the extent to which change management processes impact on employees’ work attitudes. This study aims to address this issue by developing a path model underpinned by change management and public service motivation literature. The path model was tested on a sample of 308 managerial and non-managerial public sector employees from the U.S. The results provide further empirical evidence on the types of change initiatives on nursing work and change management processes being implemented. Public sector agencies in the sample implemented a variety of change initiatives such as downsizing, delayering and empowerment. Employees reported two change management processes: the provision of change-related information and participation in change decision making. While the results indicate that change produces change-induced stressors, change information tends to reduce stressors and, subsequently, role stress. The results also indicate that change management processes are associated with higher levels of public service motivation, which is in turn connected to higher levels of person–organization fit. Person–organization fit was found to partially mediate the relationship between public service motivation and job satisfaction in the context of change.

Psychological capital as moderator of organizational change demands on nursing stress

Healthcare organizations in all OECD countries have continued to undergo change. These changes have been found to have a negative effect on work engagement of nursing staff. While the extent to which nursing staff dealt with these changes has been documented in the literature, little is known of how they utilized their personal resources to deal with the consequences of these changes. This study will address this gap by integrating the Job Demands-Resources theoretical perspective with Positive Psychology, in particular, psychological capital (PsyCap). PsyCap is operationalized as a source of personal resources. Data were collected from 401 nurses from Australia and analyses were undertaken using Partial Least Squares modelling and moderation analysis. Two types of changes on the nursing work were identified. There was an increase in changes to the work environment of nursing. These changes, included increasing administrative workload and the amount of work, resulted in more job demands and job resources. On the other hand, another type of changes relate to reduction to training and management support, which resulted in less job demands. Nurses with more job demands utilized more job resources to address these increasing demands. We found PsyCap to be a crucial source of personal resources that has a moderating effect on the negative effects of job demands and role stress. PsyCap and job resources were both critical in enhancing the work engagement of nurses, as they encountered changes to nursing work. These findings provided empirical support for a positive psychological perspective of understanding nursing engagement.

Bisphenol A exposure is not associated with area-level socioeconomic index in Australian children using pooled urine samples

Bisphenol A (BPA) is used extensively in food-contact materials and has been detected routinely in populations worldwide, and this exposure has been linked to a range of negative health outcomes in humans. There is some evidence of an association between BPA and different socioeconomic variables which may be the result of different dietary patterns. The aim of this study was to conduct a preliminary investigation of the association between BPA and socioeconomic status in Australian children using pooled urine specimens and an area level socioeconomic index. Surplus pathology urine specimens collected from children aged 0-15 years in Queensland, Australia as samples of convenience (n = 469) were pooled by age, sex and area level socioeconomic index (n = 67 pools), and analysed for total BPA using online solid phase extraction LC-MS/MS. Concentration ranged from 1.08-27.4 ng/ml with geometric mean 2.57 ng/ml, and geometric mean exposure was estimated as 70.3 ng/kg d-1. Neither BPA concentration nor excretion was associated with age or sex, and the authors found no evidence of an association with socioeconomic status. These results suggest that BPA exposure is not associated with socioeconomic status in the Australian population due to relatively homogenous exposures in Australia, or that the socioeconomic gradient is relatively slight in Australia compared with other OECD countries.

Making decisions about antibiotic use in the Australian primary healthcare sector

Introduction Australia is contributing to the global problem of antimicrobial resistance with one of the highest rates of antibiotic use amongst OECD countries. Data from the Australian primary healthcare sector suggests unnecessary antibiotics were prescribed for conditions that will resolve without it. If left unchecked, this will result in more resistant micro-organisms, against which antibiotics will be useless. There is a lack of understanding about what is influencing decisions to use antibiotics – what factors influences general practitioners (GPs) to prescribe antibiotics, consumers to seek antibiotics, and pharmacists to fill old antibiotic prescriptions? It is also not clear how these individuals trade-off between the possible benefits that antibiotics may provide in the immediate/short term, against the longer term societal risk of antimicrobial resistance. Method This project will investigate (a) what factors drive decisions to use antibiotics for GPs, pharmacists and consumers, and (b) how these individuals discount the future. Factors will be gleaned from published literature and from a qualitative phase using semi-structured interviews, to inform the development of Discrete Choice Experiments (DCEs). Three DCEs will be constructed – one for each group of interest – to allow investigation of which factors are more important in influencing (a) GPs to prescribe antibiotics, (b) consumers to seek antibiotics, and (c) pharmacists to fill legally valid but old or repeat prescriptions of antibiotics. Regression analysis will be conducted to understand the relative importance of these factors. A Time Trade Off exercise will be developed to investigate how these individuals discount the future, and whether GPs and pharmacists display the same extent of discounting the future, as consumers. Expected Results Findings from the DCEs will provide an insight into which factors are more important in driving decision making in antibiotic use for GPs, pharmacists and consumers. Findings from the Time Trade Off exercise will show what individuals are willing to trade for preserving the miracle of antibiotics. Conclusion The emergence of antibiotic resistance is inevitable. This research will expand on what is currently known about influencing desired behaviour change in antibiotic use, in the fight against antibiotic resistance. Real World Implications Research findings will contribute to existing national programs to bring about a reduction in inappropriate use of antibiotic in Australia. Specifically, influencing (1) how key messages and public health campaigns are crafted to increase health literacy, and (2) clinical education and empowerment of GPs and pharmacists to play a more responsive role as stewards of antibiotic use in the community.

Causes of rigidity in SMEs' export commencement decision

Today, small-medium sized enterprises (SMEs) collectively contribute to the largest percentage of job creation in OECD countries. SMEs have become increasingly international since the turn of the century despite being smaller in size in comparison to large multinational firms, and notably, exporting is the most favoured mode of international market entry utilised by SMEs in their internationalisation strategy. Governments around the world have acknowledged the importance of export promotion and have employed policies that are targeted at increasing the export activity of SMEs. However, in many countries, the involvement of SMEs in export operations remains rather low. Within Australia, for example, only about one-third of local SMEs are exporting and this raises an important question as to why there is such a huge percentage of non-exporters. Much scholarly research that focuses on this problem has concentrated on the broad concept of 'export barriers' that act as obstacles to a firm's export development. This paper takes a different approach to previous studies and proposes that a firm's resistance to commence exporting can be better understood through an analysis of the behavioural decision process during its pre-export state. Using a sample of Australian SMEs, the factors that are important in preventing a firm’s initial export commencement decision are categorised and discussed through the use of factor analysis.

The case for unitary taxation with formulary apportionment in the finance sector and the effect on developing nations

In 2013 the OECD released its 15 point Action plan to deal with base erosion and profit shifting (BEPS). In that plan it was recognised that BEPS has a significant effect on developing countries. This is because the lack of tax revenue can lead to a critical underfunding of public investment that would help promote economic growth. To this end, the BEPS project is aimed at ensuring an inclusive approach to take into account not only views of the G20 and OECD countries but also the perspective of developing nations. With this focus in mind and in the context of developing nations, the purpose of this article is to consider a possible solution to profit shifting which occurs under the current transfer pricing regime, with that solution being unitary taxation with formulary apportionment. It does so using the finance sector as a specific case for application. Multinational financial institutions (MNFIs) play a significant role in financing activities of their clients in developing nations. Consistent with the ‘follow-the-client’ phenomenon which explains financial institution expansion, these entities are increasingly profiting from activities associated with this growing market. Further, not only are MNFIs persistent users of tax havens but also, more than other industries, have opportunities to reduce tax through transfer pricing measures. This article establishes a case for an industry specific adoption of unitary taxation with formulary apportionment as a viable alternative to the current regime. It argues that such a model would benefit not only developed nations but also developing nations which are currently suffering the effects of BEPS. In doing so, it considers the practicalities of such an implementation by examining both definitional issues and a possible formula for MNFIs. This article argues that, while there would be implementation difficulties to overcome, the current domestic models of formulary apportionment provide important guidance as to how the unitary business and business activities of MNFIs should be defined as well as factors that should be included in an allocation formula, along with the appropriate weighting. While it would be difficult for developing nations to adopt such a regime, it is argued that it would be no more difficult than addressing issues they face with the current transfer pricing regime. As such, this article concludes that unitary taxation with formulary apportionment is a viable industry specific alternative for MNFIs which would assist developing nations and aid independent fiscal soundness.

Teacher Education for High Poverty Schools in Australia: The National Exceptional Teachers for Disadvantaged Schools Program

This chapter focuses on teacher education for high-poverty schools in Australia and suggests that a contextualization of poverty is an important step in identifying solutions to the persistent gaps in how teachers are prepared to teach in schools where they can make a lasting difference. Understanding how poverty looks different between and within different countries provides a reminder of the complexities of disadvantage. Similarities exist within OECD countries; however, differences are also evident. This is something that initial teacher education (ITE) solutions need to take into account. While Australia has a history of initiatives designed to address teacher education for high-poverty schools, this chapter provides a particular snapshot of Australia’s National Exceptional Teachers for Disadvantaged Schools program (NETDS), a large-scale, national partnership between universities and Departments of Education, which is partially supported by philanthropic funding.

Is there a relationship between screening for diabetes related foot complications and limb amputation?

Background From the conservative estimates of registrants with the National Diabetes Supply Scheme, we will be soon passing 1.1 Million Australians affected by all types of diabetes. The diabetes complications of foot ulceration and amputation are costly to all. These costs can be reduced with appropriate prevention strategies, starting with identifying people at risk through primary care diabetic foot screening. Yet levels of diabetic foot screening in Australia are difficult to quantify. This presentation aims to report on foot screening rates as recorded in existing academic literature, national health surveys and national database reports. Methods Literature searches included diabetic foot screening that occurred in the primary care setting for populations over 2000 people from 2002 to 2014. Searches were performed using Medline and CINAHL as well as internet searches of Organisations for Economic Co-operation and Development (OECD) countries health databases. The focus is on type 1 and type 2 diabetes in adults, and not gestational diabetes or children. The two primary outcome measures were foot -screening rates as a percentage of adult diabetic population and major lower limb amputation incidence rates from standardised OECD data. Results The most recent and accurate level for Australian population review was in the AUSDIAB (Australian Diabetes and lifestyle survey) from 2004. This survey reported screening in primary care to be as low as 50%. Countries such as the United Kingdom and United States of America have much higher reported rates of foot screening (67-86%) recorded using national databases and web based initiatives that involve patients and clinicians. By comparison major amputation rates for Australia were similar to the United Kingdom at 6.5 versus 5.1 per 100,000 population, but dis-similar to the United States of America at 17 per 100,000 population. Conclusions Australian rates of diabetic foot screening in primary care centres is ambiguous. There is no direct relationship between foot screening levels in a primary care environment and major lower limb amputation, based on national health survey's and OECD data. Uptake of national registers, incentives and web-based systems improve levels of diabetic foot assessment, which are the first steps to a healthier diabetic population.

The need for cost-effectiveness analyses of antimicrobial stewardship programmes: A structured review

The cost effectiveness of antimicrobial stewardship (AMS) programmes was reviewed in hospital settings of Organisation for Economic Co-operation and Development (OECD) countries, and limited to adult patient populations. In each of the 36 studies, the type of AMS strategy and the clinical and cost outcomes were evaluated. The main AMS strategy implemented was prospective audit with intervention and feedback (PAIF), followed by the use of rapid technology, including rapid polymerase chain reaction (PCR)-based methods and matrix-assisted laser desorption/ionisation time-of-flight (MALDI-TOF) technology, for the treatment of bloodstream infections. All but one of the 36 studies reported that AMS resulted in a reduction in pharmacy expenditure. Among 27 studies measuring changes to health outcomes, either no change was reported post-AMS, or the additional benefits achieved from these outcomes were not quantified. Only two studies performed a full economic evaluation: one on a PAIF-based AMS intervention; and the other on use of rapid technology for the selection of appropriate treatment for serious Staphylococcus aureus infections. Both studies found the interventions to be cost effective. AMS programmes achieved a reduction in pharmacy expenditure, but there was a lack of consistency in the reported cost outcomes making it difficult to compare between interventions. A failure to capture complete costs in terms of resource use makes it difficult to determine the true cost of these interventions. There is an urgent need for full economic evaluations that compare relative changes both in clinical and cost outcomes to enable identification of the most cost-effective AMS strategies in hospitals.

Making decisions about antibiotic use in the Australian primary healthcare sector

Background Australia has one of the highest rates of antibiotic use amongst OECD countries. Data from the Australian primary healthcare sector suggests unnecessary antibiotics were prescribed for self-resolving conditions. We need to better understand what drives general practitioners (GPs) to prescribe antibiotics, consumers to seek antibiotics, and pharmacists to fill repeat antibiotic prescriptions. It is also not clear how these individuals trade-off between the possible benefits that antibiotics may provide in the immediate/short term, against the longer term societal risk of antimicrobial resistance. This project investigates what factors drive decisions to use antibiotics for GPs, pharmacists and consumers, and how these individuals discount the future. Methods Factors will be gleaned from published literature and from semi-structured interviews, to inform the development of Discrete Choice Experiments (DCEs). Three DCEs will be constructed – one for each group of interest – to allow investigation of which factors are more important in influencing (a) GPs to prescribe antibiotics, (b) consumers to seek antibiotics, and (c) pharmacists to fill legally valid but old or repeat prescriptions of antibiotics. Regression analysis will be conducted to understand the relative importance of these factors. A Time Trade Off exercise will be developed to investigate how these individuals discount the future. Results Findings from the DCEs will provide an insight into which factors are more important in driving decision making in antibiotic use for GPs, pharmacists and consumers. Findings from the Time Trade Off exercise will show what individuals are willing to trade for preserving the miracle of antibiotics. Conclusion Research findings will contribute to existing national programs to bring about a reduction in inappropriate use of antibiotic in Australia. Specifically, influencing how key messages and public health campaigns are crafted, and clinical education and empowerment of GPs and pharmacists to play a more responsive role as stewards of antibiotic use in the community.

Consumerist Predators"? Emerging lifestyles between McDonaldization and sustainability perspectives: the case of highly qualified employees (HQEs) in India

In industrializing countries new groups of consumers with remarkable purchasing power are emerging. Representing a ?new middle class? they are seen as a carrier and promoter of a so-called ?western way of life? beyond the OECD countries. They are presented as having a consumerist predator lifestyle which stands in conflict with the requirements for a sustainable future. Furthermore, they are imputed a profound lack of a sense of responsibility towards society. However, such a ?civil society spirit? is a core prerequisite for coping with the challenge of changing existing lifestyles to insure a more sustainable future....