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Article
Publication date: 29 June 2012

Rudie Nel and Gerhard Nienaber

Since its introduction in South Africa during 2009, the ability of vehicle emissions tax to reduce CO2 emissions has been questioned, but not yet assessed. The purpose of…

Abstract

Purpose

Since its introduction in South Africa during 2009, the ability of vehicle emissions tax to reduce CO2 emissions has been questioned, but not yet assessed. The purpose of this paper is to attempt such an assessment by considering tax designs to reduce passenger vehicle CO2 emissions.

Design/methodology/approach

In this exploratory study, the authors reviewed literature on tax designs to reduce CO2 emissions, and compared the design of current taxes on passenger vehicles in South Africa to the tax designs most advocated in the literature to evaluate the effectiveness of the current South African design for this purpose.

Findings

Tax designs refer to the stage when taxes are levied (purchase/ownership/usage taxes) – levying taxes at one stage may more effectively reduce emissions than levying them at another. The current tax focus on consumers may indeed affect taxes' ability to reduce emissions, and in the current tax mix, taxes on passenger vehicles may not be the most effective way of reducing emissions. The investigation of a “feebate” policy as an alternative initiative to address increased passenger vehicle CO2 emissions is recommended.

Originality/value

Only anecdotal evidence questions the ability of the vehicle emissions tax to reduce CO2 emissions. This study is intended to elicit further discussions on other fiscal reform initiatives aimed at reducing CO2 emissions by passenger vehicles in South Africa.

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Article
Publication date: 11 May 2015

Rui Fernandes, Carlos Pinho and Borges Gouveia

The purpose of this paper is to provide a new modelling framework for distribution network strategy and to study how various transfer-pricing schemes cope with stochastic…

Abstract

Purpose

The purpose of this paper is to provide a new modelling framework for distribution network strategy and to study how various transfer-pricing schemes cope with stochastic demand under different countries tax policies.

Design/methodology/approach

Use is made of real options to quantify the available options for supply chain network design. The application of real options approach relies on three main conditions, such as the existence of uncertainty (market), flexibility (different network design) and irreversibility (investments) in the decision process.

Findings

Evaluation of the potential impact of changes in local tax policies on long-run plant and distribution centers location decisions. A more intensive tax regime tends to promote changes in the distribution network that support multinational companies. In high uncertain markets, the options to change the network are more attractive – uncertainty is linked with an increase in flexibility.

Practical implications

The present study provides decision makers with a useful tool for supporting the design of global logistics networks, considering different scenarios and therefore determines a more after-taxes profitable logistics network configuration.

Originality/value

Integrate financial issues while studying different scenarios for supply chain network designs. It presents a model that focus on distribution network design considering transfer-pricing methods as decision variables and aiming after-taxes bottom-line results maximization. There are relatively few “reported” implementations of global profit maximization models for large-scale networks. Thus, we believe that the implementation of global profit maximization models represents a potentially significant unrealized opportunity worthy of serious consideration by many firms.

Details

The International Journal of Logistics Management, vol. 26 no. 1
Type: Research Article
ISSN: 0957-4093

Keywords

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Book part
Publication date: 15 June 2020

Thomas Walker, Dieter Gramlich and Adele Dumont-Bergeron

In 2017, global plastic production reached 348 million tonnes. Despite growing concerns about the environmental challenges associated with both plastic production and…

Abstract

In 2017, global plastic production reached 348 million tonnes. Despite growing concerns about the environmental challenges associated with both plastic production and plastic waste, recent estimates suggest that plastic production and subsequent waste is expected to double by the year 2035 (European Commission, 2018). To help reduce the amount of plastic waste that litters the oceans and damages the environment, the European Union has recently commissioned a study about the feasibility of levying a tax on plastic products (New Economic Foundation for the Rethink Plastic Alliance, 2018). However, very few academic articles currently exist that critically examine the arguments for or against a plastic tax and thereby enlighten government and regulators on the subject. This chapter investigates whether plastic taxes can be used as an economic disincentive for plastic products and explores its advantages and disadvantages within a circular economy. It explores whether a plastic tax is the right economic instrument to limit the use of plastics, generate design and technical innovations for bio-based materials and degradable/recyclable plastics, create other economic incentives to optimize the value of plastic and its waste collection, and increase public awareness and responsibility. We find that a plastic tax may be a suitable solution as it is likely to influence the design, production, consumption, and waste sectors if designed properly. Yet, the tax should be carefully implemented and combined with other instruments to obtain the desired outcomes and reduce the occurrence of unfavorable side effects.

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Article
Publication date: 12 May 2021

Francesco Bloise, Maurizio Franzini and Michele Raitano

The authors analyse how the association between parental background and adult children's earnings changes when net rather than gross children's earnings are considered and…

Abstract

Purpose

The authors analyse how the association between parental background and adult children's earnings changes when net rather than gross children's earnings are considered and disentangle what such changes depend on: differences between pre and after taxes earnings inequality or reranking of individuals along the earnings distribution before and after taxes.

Design/methodology/approach

Using data from European Union Statistics on Income and Living Conditions (EU-SILC) 2011, the authors focus on two large European countries, Italy and Poland, with comparable levels of inequality and background-related earnings premia but very different personal income tax (PIT) design and estimate – at both the mean and the deciles of the earnings distribution – the association between parents' characteristics and children's gross and net earnings.

Findings

The authors find that in Italy the PIT reduces the magnitude of the association between parental background and adult children's earnings at the top of the distribution, while no effects emerge for Poland, and the reduction is mostly due to a decrease in earnings inequality rather than to a re-ranking of children along the distribution. The findings are confirmed when the authors simulate the introduction of a “quasi flat tax” regime in Italy.

Social implications

The findings suggest that the higher the tax progressivity, the higher the background-related inequality reduction and the lower the intergenerational association, signalling that the degree of progressivity amongst children may be an effective weapon to reduce intergenerational inequality.

Originality/value

In the literature on intergenerational inequality, the role of taxes is usually overlooked. In this paper, the authors try to fill this gap and enquire how the PIT design affects the association between parental background and adult children's earnings.

Details

International Journal of Manpower, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0143-7720

Keywords

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Article
Publication date: 14 August 2017

Horn-chern Lin and Tao Zeng

This paper aims to examine the design of optimal incentives for a firm’s tax department in the presence of information asymmetry.

Abstract

Purpose

This paper aims to examine the design of optimal incentives for a firm’s tax department in the presence of information asymmetry.

Design/methodology/approach

This paper provides a theoretical model to examine the design of optimal incentives. The focus is on a situation in which a risk-averse tax department has private information about its efficiency type or effort to be exerted before the firm sets the incentive schemes.

Findings

This paper shows that a tax department’s risk aversion leads to a decline in the fraction of the cost borne by the tax department. It also shows that the optimal contract schemes should be designed to filter out as much uncontrollable risk as possible by using third-party information relevant to a tax department’s realized cost.

Social implications

It contributes to a better understanding of the impact of corporate incentive plans on firms’ tax practices. This study, by designing a theoretical model, helps explain why there exist differences in tax planning across firms based on the finding that incentives for tax planning activities differ across firms.

Originality/value

This paper is the first study that considers the situation in which tax managers’ risk-averse and types, as well as relevant information collected by the firms, can be used to set up incentive schemes and investigates whether and how the incentive schemes will be affected when firms improve their prior information by acquiring relevant information before the tax department acts.

Details

Review of Accounting and Finance, vol. 16 no. 3
Type: Research Article
ISSN: 1475-7702

Keywords

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Article
Publication date: 4 November 2014

Michael Keen

The purpose of this paper is to address two fundamental issues in indirect tax design. It first revisits the case for reduced rates on items especially important to the…

Abstract

Purpose

The purpose of this paper is to address two fundamental issues in indirect tax design. It first revisits the case for reduced rates on items especially important to the poor, and then explores the welfare costs from cascading taxes.

Design/methodology/approach

Applied theory was used in this paper.

Findings

On the first issue, the paper establishes conditions under which even very crudely targeted spending measures better serve the interests of the poor than does the reduced taxation of particular commodities looming large in their consumption. On the second, it shows that these may actually be lower the wider the set of inputs that are taxed but, more to the point, may plausibly be large even at a low nominal tax rate and with relatively few stages of production: contrary to a common mantra, “a low rate on a broad base” is not always good policy.

Originality/value

Both issues addressed in the paper are recurrent and central concerns in the design of indirect taxes in general, and the value-added tax (VAT)/general sales tax (GST) in particular. The author is unaware of other treatments that are at all comparable in perspective or results. The author hopes the analysis will prove useful in many contexts where these issues arise – not least in India, where these issues are central to discussions of VAT/GST reform.

Details

Indian Growth and Development Review, vol. 7 no. 2
Type: Research Article
ISSN: 1753-8254

Keywords

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Article
Publication date: 11 October 2011

Oskar Henkow and Andreas Norrman

Both logisticians and tax lawyers design global supply chains – but based on different logics. If they do not align each other's perspectives, problems might occur in…

Abstract

Purpose

Both logisticians and tax lawyers design global supply chains – but based on different logics. If they do not align each other's perspectives, problems might occur in different areas. The purpose of this paper is to illustrate the impact the tax system could have on supply chain design, reflect (from both perspectives) on how the rules function, and propose a common communication platform for supply chain issues and tax issues.

Design/methodology/approach

This interdisciplinary research is based on a systems approach, combining logistics system descriptions (based on interviews, workshops and company data) with legal analysis. Main principles of the tax system were applied to the system descriptions (the principle approach).

Findings

Logistics and tax systems interact. Issues of implementing drop shipment in different global contexts are shown. One issue is cross‐border rerouting leading to unnecessary environmental impact. Hence interaction between the domains should be improved before starting to optimize global logistics or tax structures. A combined platform for mapping flow charts jointly is proposed.

Practical implications

Practitioners from both domains acquire increased understanding of each other's perspectives and a joint tool for flow mapping, combining facts both sides need in their overall analysis. Logisticians will gain better insight into general fiscal principles.

Social implications

Societal inefficiencies due to extra cross‐border transports instead of drop shipments were the result when the fiscal rules were applied in reality in certain contexts. This was probably not desired from the policy makers' perspective, so it might lead to policy makers to better try to understand the combined impact of the domains.

Originality/value

The paper usefully combines legal and logistics approaches.

Details

International Journal of Physical Distribution & Logistics Management, vol. 41 no. 9
Type: Research Article
ISSN: 0960-0035

Keywords

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Article
Publication date: 25 July 2018

António Martins

The purpose of this paper is to discuss tax and accounting issues related to the evolution of the intellectual property box in Portugal and present a preliminary view of…

Abstract

Purpose

The purpose of this paper is to discuss tax and accounting issues related to the evolution of the intellectual property box in Portugal and present a preliminary view of its impact. In 2014, Portugal adopted an Intellectual Property (IP) box, exempting from corporate taxation half of the gross revenue obtained from selling IP rights. In 2016, the country adopted a new IP regime, in line with BEPS’ recommendations, with stricter rules for exempting income. The “modified nexus approach”, recommended by the OECD, was the cornerstone of legal changes. The research questions addressed in this paper are as follows: was the Portuguese IP box, set up in 2014, internationally competitive in terms of the scope of qualifying assets and the tax rate when compared to other EU countries? Could its legal design induce potential corporate tax avoidance? Does the new IP box framework reduce avoidance opportunities and does it increase tax and accounting complexity for companies and tax auditors?

Design/methodology/approach

The methodology used in this paper is based on the legal research method combined with a case study analysis of the IP box in Portugal. The economic motivation for legal changes, the interaction between the tax authorities and the policy makers in the wake of BEPS’ recommendations, and the economic crisis that Portugal faced, influenced legislative options. A multidisciplinary approach is required to analyse the IP box modifications, and the methodology follows this line of enquiry.

Findings

The author concludes that the 2014 IP box was not competitive in terms of the scope of qualifying assets and the tax rate. However, it could be a potential tool for tax avoidance, mainly linked to transfer pricing strategies. Legal changes, introduced in 2016, by enacting stricter rules for granting tax benefits, fit a worldwide trend of restraining profit shifting opportunities linked to intangibles. The new framework clearly impacts tax and accounting complexity, for companies and tax auditors. Preliminary data, for 2014 and 2015, show a negligible impact of the IP box on corporate taxation.

Practical implications

The “modified nexus approach” is not a definitive panacea for fighting tax avoidance. Multinationals may move resources (e.g. highly specialized persons) to entities that are developing IP, curtailing the restriction associated with acquiring services from related parties. Tax authorities may fight these schemes, but face a challenging task. The grandfathering option and new accounting choices related to expense allocation are delicate issues. Not all countries adopted BEPS’ recommendations at the same time, which may impact international profit shifting activities and increase tax authorities’ costs to control them. The paper also provides preliminary and exploratory evidence that IP boxes, per se, do not suddenly raise the R&D activity of firms.

Originality/value

The analysis highlights legal, accounting and economic issues in dealing with changes in investment incentives and can or may be a useful remainder for countries in the process of setting up, or amending, IP boxes.

Details

Journal of International Trade Law and Policy, vol. 17 no. 3
Type: Research Article
ISSN: 1477-0024

Keywords

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Article
Publication date: 1 January 2006

Howell H. Zee

The paper aims to investigate the possible crowding‐out of regular development aid by global taxes.

Abstract

Purpose

The paper aims to investigate the possible crowding‐out of regular development aid by global taxes.

Design/methodology/approach

The paper models cross‐country interactions in aid giving using a simple Cournot‐Nash framework.

Findings

The paper argues that global taxes could lead to an increase in aid‐cum‐tax revenue if such taxes produce a globally net positive income effect. Whether this condition can be satisfied is very much an open empirical issue. An alternative to global taxes is cooperative aid‐giving among donors, which this paper shows will always result in more global aid.

Originality/value

The paper highlights the need for a shift of policy focus from designing global taxes to designing viable mechanisms for effective aid coordination, for which multilateral institutions could play a crucial role.

Details

Journal of Economic Studies, vol. 33 no. 1
Type: Research Article
ISSN: 0144-3585

Keywords

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Article
Publication date: 1 January 2006

Margery Stapleton, Helena Lenihan, Sheila Killian, Breda O'Sullivan and Kemmy Business

Under the Kyoto Protocol Ireland is committed to ensuring that its greenhouse gas emission levels are at or below 113 per cent of 1990 levels for the years 2008–2012…

Abstract

Under the Kyoto Protocol Ireland is committed to ensuring that its greenhouse gas emission levels are at or below 113 per cent of 1990 levels for the years 2008–2012. Irish emissions have already exceeded this limit by approximately 10 to 15 per cent and must be reduced if the Kyoto Protocol targets are to be met. In this context, and drawing on relevant theory and research, this paper discusses the rationale for, and the potential impact of, government intervention in the market for carbon dioxide (CO2) emissions. The use of a Carbon Tax as a policy tool in reducing CO2 emissions is examined from both economic and taxation perspectives. Particular attention is paid to the Irish National Climate Change Strategy formulated in 2000 and the consultation process on implementing a Carbon Tax initiated by the Department of Finance in 2003. In September 2004 the Irish Government decided not to implement the proposed Carbon Tax. Submissions from interested parties on the carbon tax consultation process are reviewed against the rationale for implementation of such a tax. The body of evidence presented in this paper supports the implementation of a Carbon Tax—suggesting that the decision not to implement such a tax may have been a lost opportunity. The paper argues that a well‐designed Carbon Tax for Ireland, a simple levy on a close proxy for emissions, would be effective in influencing taxpayer behaviour bringing about a reduction in Ireland's CO2 emissions and supporting the polluter pays principle. In the absence of a carbon tax Ireland's Kyoto target is unlikely to be met and the consequent financial penalties will fall on all taxpayers. The paper concludes that the Irish Government should revisit this decision.

Details

Social Responsibility Journal, vol. 2 no. 1
Type: Research Article
ISSN: 1747-1117

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