The origins of the former small business taxconcessions, the Simplified Tax System 6 (STS), can be traced back to the Review’s first paper where it correctly identified the general problem of onerous compliance costs for small businesses. 7 Moreover, as the Review 8 noted the costs of tax compliance for small business are highly regressive. However, the Review 9 then inappropriately attributed this problem to the perceived difficulties that small businesses were having with the following four income tax accounting issues: the accruals income tax accounting rules, 10 the prepayment framework, 11 the capital allowances regime 12 and the trading stock rules. 13 Thus the Review recommended ‘simplified’ rules for small business for: a cash system of income tax accounting, 14 treatment of prepaid expenses, 15 capital allowances 16 and trading stock. 17 It is evident though that the alternative non – STS income tax accounting rules for accruals, prepayments, capital allowances and trading stock did not greatly burden small business since these measures are required for financial
To the degree that taxconcessions increase housing starts, renters may benefit indirectly, but the horizontal inequity relative to owner- occupants remains. Still, for several reasons, the extent of the inequity may be less than it seems. As explained later, some of the concessions to owner-occupants are capitalized into house prices, meaning that landowners and developers receive part of the benefit. 22 Also, a large percentage of current renters have been or will be owners at some point during their lifetime, so any tax inequity they now suffer as renters will be partially or fully offset by their favored position later when they are owners. In addition, many renters do not pay income taxes, so they cannot be said to be treated inequitably in the Internal Revenue Code with respect to households that do pay taxes. Moreover, most renters (as is already true of a majority of homeowners) would not itemize deductions on their tax returns, even if they did become owner-occupants. Further, the rise of condominiums has made small dwellings more broadly available for owner-occupancy. And as already suggested, some renters have incomes high enough to suggest that they have ample freedom to choose the tenure status they wish. Final- ly, the tax treatment of investment in rental housing mitigates some of the apparent disadvantage to renters. 23
This paper presents an argument for rethinking superannuation taxation and the age pension means test, on the basis of a principled approach across all categories of saving and over the lifecourse. The current retirement tax-transfer system embodies two conflicting policies. On the tax side, the taxconcessions for superannuation are excessively generous relative to either a comprehensive income or an expenditure tax benchmark, and relative to the tax treatment of other forms of saving outside superannuation. In the transfer system, the age pension has a moderately tight means test, comprising an income test (including deemed income from financial assets) and an alternative asset test. The pension means test operates as a combination of an income tax and wealth tax for those in the pension system. We characterise the test as “moderate” because the high thresholds and housing exemption offset the very high effective marginal tax rates that can apply to both earned and especially investment income. As a result of these conflicting policies, Australia’s tax settings for superannuation and our age pension means test may distort both savings and investment behaviour, while the age pension means test also may distort work behaviour. A principled tax treatment of savings could apply to savings both inside and outside of superannuation and thus make the tax system neutral across the various investment options open to savers. It also opens up the possibility of a tax/transfer system which is neutral over the life course, as between the pre-retirement and post-retirement phases. We do not take issue with mandatory retirement savings; these proposals relate to the tax treatment, not other regulatory aspects. However, with a neutral tax treatment, some regulatory requirements that restrict superannuation savings, such as contribution limits and preservation rules, could be removed.
The Government of Pakistan, like many other developing countries, has opted for tax holidays as an important fiscal measure to encourage rapid industrialisation in the backward areas. This concession is also supplemented by several other economic and non-economic measures including import duty, and depreciation allowances. Mintz (1990) discusses the efficacy of tax holidays in the presence of accelerated depreciation allowances concludes that tax holidays which are designed to increase capital formation may end up penalising capital formation. Mintz’s (1990) conclusion is based on the assumption that if the assets are long-lived, and the income tax system allows deductibility of accelerated depreciation but cannot be deferred, then the tax holidays, by preventing depreciation deduction in the early period may actually penalise investment during the tax holiday period. If on the other hand the depreciation allowance is deferred till the end of tax holiday period, the tax system is genuinely generous and provides a real incentive for capital formation.
Direction planning has been a major factor in shaping the economic destiny of Malaysia. It has been instrumental in achieving social goals like the redistribution of wealth, and the provision of vital public utilities. The transformation process adopted an open economy model, choosing trade as its engine of growth. The country provided infrastructural facilities, taxconcessions, and unrestricted remittance options to attract foreign capital It rapidly expanded education and training facilities for human resource development; Malaysia has already past the UNDP threshold for high human development and was ranked 63 with her index at 0.811 in 2005 as per HDR for the year 2008. In addition, the country brought in a large number of foreign workers and professionals to fill the critical gaps, even as their presence in large numbers caused some socio-cultural problems.
Creating “a new edition to the Kerala development model,” the 2021-2022 budget, focuses on welfare measures, provides for additional expenditure of ₹1,164 crore and taxconcessions of ₹191 crore against additional revenue mobilisation of just ₹200 crore, leaving a cumulative deficit of ₹1,306.69 crore. In recognition of their role in COVID-19 management, ASHA workers’ allowance would be hiked by
The risk of voluntary non-compliance is also higher in the case of small busi- nesses (Cowell, 2003; Slemrod, 2004; Crocker and Slemrod, 2005). Many SMEs, even if incorporated, are managed by the owners. Unlike professional managers or accountants in large companies, they do business using their own capital and have different interests in its use. Their personal risk-aversion may be lower as any gains arising from tax evasion directly accrue to business manager-owners. For this reason they are more sensitive to changes in the financial situation, unfair treatment by tax administration or simply tempted by existing opportunities. Un- questionably, there are more opportunities for small businesses to be non-compli- ant than for larger ones – they can use cash transactions, disguise their private consumption as business inputs, or hide actual wage payments (Cowell, 2003; Engstom et al., 2006). By doing so they manipulate their sales, margins, profits, and even taxable wages paid to their employees. More importantly, it is easier for them not to be formalized at all. Specific taxconcessions available for small busi- nesses offer further avenues for tax abuse, e.g. hiding below the eligibility thresh- old in a presumptive tax (OECD, 2009).
The impact of the new regime was expected to reduce the compliance costs of many small business entities because there is only one entry threshold to gain access to multiple concessions (Costello, 2007). However Kenny (2008) argues that the taxconcessions from the SBE regime do not adequately offset the compliance costs for small businesses. As Kenny explains, the threshold for entry, when considering aggregated or ‘grouped’ entities this is because special rules apply with different levels of control over an entity. The rules were extensive (62 paragraphs of explanation) which may prove difficult and time consuming for small businesses to understand. Simplified prepaid expenses allow a business to deduct a prepayment if the service period is 12 months or less, and while it does provide small businesses with a timing benefit, there does not appear to be any significant simplification benefits. This concession contradicts the accounting principles that require expenses to be recognised in the period to which they relate. Compliance costs may increase, as taxpayers would need to adjust their accounting records for the immediate deduction.
The Review Panel considered the retirement income system within the key considerations of whether it is broad and adequate, acceptable, robust, simple and approachable, and sustainable. The review questions relating to taxation concessions crossed several of these key considerations. For example, under the ‘broad and adequate’ heading consultation question 2.3 asked what role the government should play in assisting individuals in meeting their retirement income expectations, including the incentives to make additional savings. 92 Under the ‘acceptable’ heading, question 3.1 asked whether access to concessions adequately consider the needs and preferences of individuals both before and after retirement. 93 However, the most pertinent question in relation to taxconcessions was 3.2 which asked whether the current level of superannuation income taxconcessions was appropriate and sustainable into the future, whether the current concessions are properly targeted, and if not, how they should be reformed. 94 Also of relevance, under the ‘simple and approachable’ heading question 5.1 asked whether the retirement income system imposed undue complexity and cost on retirees and workers, and whether the complexity should be reduced. 95 Despite these questions, a key restriction placed on the Review Panel in its report on the retirement income system was the requirement in the original terms of reference that the review reflect the government’s policy to preserve the tax-free status of superannuation payments for those over 60 years. 96
Guasch (2004) has examined nearly 1,000 Latin American concession contracts awarded be- tween the mid 1980s and 2000. He found that 30% of all contracts were renegotiated and that this percentage increases to 54.4% in the transportation sector (roads, ports, tunnels and air- ports) and to 74.4% in the water sector. Table 1, which we reproduce from his book, shows that renegotiations often favor the firm at the expense of the rest of society. For example, 62% of renegotiations led to tariff increases, 38% to extensions of the concession period and 62% to re- ductions in investment obligations. Renegotiations do not only occur in developing countries. 2 Gómez-Ibáñez and Meyer (1993) analyze transportation concessions in many industrialized countries and find that renegotiations are also common.
state – company sovereignty process. The cases we have presented speak directly to that research agenda. The concessions that Keegan Resources and Newmont have obtained from the Ghanaian state give these companies legal access to subterra- nean ore deposits, but they are only partially able to bene ﬁ t from this. In both cases, we see that the companies still have to work out socio-spatial divisions of ore. Ribot and Peluso (2003) rightly stress that factors such as technology, knowl- edge, authority and identities play a key role in access mechanisms. Our approach to in-depth geopolitics applies their insights by connecting differences in techno- logical capabilities and geological knowledge to the social ﬁ eld of localized politics and social organization. Companies use technology and geological knowledge to carry out their mining operations in regions where artisanal mining has a long history and strong associations with traditional forms of land use and ownership. Interestingly, the way in which artisanal miners can ‘ interrupt ’ state – capital alli- ances is due to their association with chiefs, who can still act as landowners.
The new Albanian law provided 3 types of Concessions: a. Concession, through which the concessionaire, gives the right of use in the field of material goods, for example, in the field of water supply, natural resources and minerals, b. Concessions for the implementation of public works and c. Concessions for granting public services. According to Article 5, Law on Concessions and Public-Private Partnership is not applied on Concessions on construction measures for the construction and management of hydropower stations and power supplies, for which the law of 1996 was valid. This dual system will be abolished within four years from the entry into force of the new law of 2013. Until then, all service contracts and concessions must be completed with the old law and be subject to the new law of 2013. New contracts need to be signed for a maximum term of 35 years (Malltezi 2013).
However, it is in the field of road PPP projects where the application of the theory of real options has been developed with greater intensity. For example, Zhao et al. (2004) use the real options approach for the analysis of the decision-making process in the development of a road network. Both Chiara et al. (2007) and Brandao and Saraiva (2008) use the real option framework to carry out the valuation of a guarantee of minimum revenues granted by the Administration to road concession. Shan et al. (2010) propose a system of options that allow to adequately manage the demand risk in road concessions. Kokkaew and Chiara (2013) also propose a government guarantee model based on multi-early exercise options with the objective of obtaining a better allocation of demand risk between the Administration and the concessionaire. Godinho and Dias (2012) use the option of postponing a certain investment to analyze the optimal timing in the development of road infrastructure.
Another possible argument for concessions in this connection is that where the market has undervalued the objective of a particular set of journeys, as say in the case of education, then the concessions could be justified. This may well be a valid point, which is why this paper does not argue against concessions for students. However pensioners travel for exactly the same wide variety of reasons as the rest of the population, with the obvious and big exception that few pensioners travel to work. And it is almost nonsensical to claim that the market has undervalued all the objectives for which people travel, because this includes just about every conceivable human activity. But if by any chance the market has undervalued all these activities, then this is a case for subsiding all travel for the entire population !
In the early nineties Chile launched a massive program of infrastructure concessions, which completely renovated its road system, ports and airports. Most of the major pitfalls that have plagued concessions elsewhere were avoided, and the program was successful in upgrading Chile’s transport infrastructure. Nevertheless, contract renegotiations have been pervasive. 7 Here we describe two types of renegotiations that were used to anticipate spending. In the first type, the Ministry of Public Works (MOP by its Spanish acronym) changed the terms of the contract in order to obtain additional works from the concessionaire. In the second type, MOP exchanged an “insurance premium” (i.e. a cash payment made upfront by the concessionaire) for a potential extension of the concession term, which translates into less income for future administrations.
We use an original data set, developed by the World Bank, which describes the characteristics of nearly 1,000 concessions awarded in Latin American and Caribbean countries from 1982 to 2000 19 . As in GLS, and to keep results strictly comparable, we again focus on water and transport concessions in five countries (Argentina, Brazil, Chile, Colombia and Mexico), between 1989 and 2000. We have information on the general details of the projects (sector, activity, year of award, award criteria, size and duration of the concession), on the institutional and regulatory context, the type of regulatory framework put in place (price cap or rate of return), as well as the evolution of the main economic variables (growth, exchange rate, inflation) and the timing of national and local elections. Table 1 presents the full list and definitions of variables used in the analysis below and gives summary statistics.