Revenue Laws Research Articles

Criminalising and Punishing Non-Compliance with Petroleum Revenue Laws in Africa: Ghana's Experience with Non-Compliance

The discovery of oil in commercial quantities in Ghana in 2007 came with the hope of an economic boom and infrastructure development. The parliament of Ghana passed the Petroleum Revenue Management Act (Act 815) in 2011 and subsequently amended parts to address new concerns. The law does not only identify all the sources of revenue that should accrue to the Government of Ghana, but it also sets out which state institution is responsible for the assessment and collection of revenue, how revenue allocation should be made, and what it should be used for. The Public Interest and Accountability Committee (PIAC) established under the law to monitor statutory compliance with the collection, disbursement, and use of all petroleum revenues has raised issues of non-compliance with statutory provisions by state institutions and government officials since 2011. The implications of non-compliance with Petroleum Revenue Management Statutes cannot be overstated. This article, which is generally descriptive and interspersed with some textual analyses, proposes criminalising all breaches of the Petroleum Revenue Management Act with deterrent sanctions.

Incompatibility of Laws and Natural Resources: A Case Study of Land Revenue Laws and Their Implications in Federal Areas of Pakistan

Better rule of law would generate economic growth, which would in turn build constituencies for democratic reforms [Root and May (2006)]. Consider prisoners dilemma, to Law and Economics Scholars, the inevitability of prisoner’s dilemmas arising to block potentially efficient exchanges explains the need for and consequently the adoption of contract law. When the law enforces contracts, it permits the participants in a potential prisoners’ dilemma the option of escaping the dominant strategy equilibrium of non-cooperation, which prevents the achievement of efficient exchanges, by permitting the parties to effectively pre-commit to future cooperative behavior. Mutual pre-commitments can produce the efficient cooperate-cooperate equilibrium. The existence of contract law then tends to foster efficient cooperative behaviour. Institutions are considered to provide the mechanisms by which individuals can resolve social dilemmas [Steins (1999)]. They are sets of rules that people have created in order to control/regulate the behavior of people using a natural resource. Several layers of institutions are important for institutional development and economic performance. These layers, from the slowest moving to the fastest moving are: human motivations and social institutions, political institutions, legal institutions and private institutions [Azfar (2006)]. Institutions perform their role to frame rules, procedure and enabling environment for implementation of rules. Rights of individuals are recognised and recognised through institutions as well.

“Greasy Thumb”—The Man Who Made the Chicago Mob

“Greasy Thumb”—The Man Who Made the Chicago Mob

WITHHOLDING TAX WHERE NON-RESIDENTS DISPOSE OF IMMOVABLE PROPERTY

A new section 35A has been inserted into the Income Tax Act 58 of 1962 by the Revenue Laws Amendment Act 32 of 2004, published in Government Gazette 27188 of 24 January 2005. It will come into operation on a date to be determined by proclamation in the Gazette. Essentially the new provision imposes a statutory duty on a purchaser of immovable property to withhold a certain percentage of the amount payable to the seller in respect of the sale, and to pay over such amount to SARS, where(a) the seller is a non-resident; and(b) the total amount payable by the purchaser to the seller (or to someone acting on behalf of the seller) is more than R2-million.The duty to withhold the percentage in question rests on all purchasers of immovable property, residents as well as non-residents. To ensure compliance certain onerous duties are placed on estate agents and conveyancers rendering professional services in respect of the sale of immovable properties.

Fiscal Regulatory Frameworks through the National Revenue Authority as an Engine of Economic Growth in Sierra Leone: An Overview

The study explored the fiscal regulatory frameworks through the NRA as an engine of economic growth in Sierra Leone. The study revealed that revenue mobilization is an important device for the Government of Sierra Leone (GoSL) in accomplishing its determinations for poverty reduction; delivering its Agenda for Prosperity; building up financial independence; and reaching middle income standing. It also exposed that the financial and regulatory frameworks that support NRA to perform effective revenue mobilization are based on the following regulations and laws such as: revenue laws enacted by parliament; annual budget, Finance Act, Strategic plan; the assessment of collection and accounting for all revenue collected. In addition, the use of electronical based systems, the provision of tax legislation and policy, transparency in the tax administration, modernization of custom service department, the national acts, regional treaties, other international treaties are some of the financial and regulatory frameworks that back NRA to perform effective revenue mobilization.

ENGLISH-1 Revenue Laws in the Yūsufzai State of Swat, Khyber Pakhtunkhwa, Pakistan (An Analysis from Islamic Law’s Perspective)

The taxation system is crucial for every country to perform its duties in an organized way and, at the same time, to develop itself, too. The Yūsufzai state of Swat, on the same way, had been developed vividly with an efficient system of ‘Ushar and Zakāt – the tax tools at that time. In this research endeavor, the taxation laws of the former Swat state, with primary focus on ‘Ushr, had been discussed and analyzed, too, critically from Sharī’ah perspective – as the head of the state, at that time, used to claim all state laws as Sharī’ah based. While probing this claim, only authentic and reliable sources had been used; applying the content analysis technique of qualitative research. During the analysis, it came to know that tax laws in the state were originated, primarily, from Islamic law followed Rewāj and laws of developed nations. These latter sources were either Sharī’ah based or Sharī’ah complied – at least. The mechanism for the collection of tax was including, not exhaustively, the contract of ‘Ijāra (lease) through auction process. This method of auction was in line with Sharī’ah. The ‘Ijāragar (contractor), for instance, was allowed to collect more than the stipulated quantity which he used to keep it as profit.in addition to this, ‘Ushar and Zakāt were also used as main sources for the generation of revenue. The mechanism, followed, herein, was also Sharī’ah based to a large extent. In addition, some other revenue sources were derived from Rewāj. Study reveals that few of such sources were in consistent with the basic guidelines of Islamic law.

Brief of Amici Curiae Former Government Officials in Support of Respondents, CIC Services, LLC v. Internal Revenue Service

This is a case about tax shelters. It presents a narrow legal question: May people and companies that promote abusive tax shelters sue to block enforcement of monetary penalties for failing to disclose those tax avoidance transactions to the IRS? But the practical question is far broader. At stake is whether the tax-shelter industry will be permitted to use waves of strategic pre-enforcement lawsuits to hobble the IRS’s efforts to combat abusive tax shelters. The narrow legal question can and should be decided based on the plain statutory text. Petitioner seeks to permanently restrain the IRS from imposing penalties for failure to disclose certain “micro-captive insurance” transactions that taxpayers use to claim losses. Petitioner has advertised these transactions as “tax shelters.” Congress has deemed these penalties to be “taxes” for purposes of the Anti-Injunction Act. And that Act expressly bars any “suit for the purpose of restraining the assessment or collection of any tax” by “any person.” Petitioner’s suit therefore seeks to “restrain” the “assessment” of a penalty that Congress has defined as a “tax.” That alone is enough to resolve this case. But, as this brief shows, broader historical context and practical consequences confirm why it is important for this Court to follow the plain statutory text. This case does not arise in a vacuum. It arises against the backdrop of a decades-long struggle between the federal agency charged with responsibility for administering and enforcing the internal revenue laws and an industry consisting of accountants, lawyers, bankers, insurance companies, and others working in concert to defeat those laws. A ruling for petitioner would mark a resounding win for the tax-shelter industry and a significant setback for the government in its ongoing effort to reveal and challenge abusive tax shelters. It could cost the federal treasury billions of dollars annually. Petitioner’s effort to frustrate tax assessment is exactly the kind of demand that the Anti-Injunction Act seeks to prevent. Rather than hand the tax-shelter industry a powerful new tool to thwart the assessment of taxes on a massive scale, this Court should apply the statute as written and affirm. AMICI: Lily Batchelder: Majority Chief Tax Counsel, Senate Committee on Finance (2010–2014) and Deputy Director, National Economic Council (2014–2015). Mark Mazur: Staff Economist, Joint Committee on Taxation (1989–1993); Director of Research, Analysis, and Statistics of Income, IRS (2001–2009); Deputy Assistant Secretary of the Treasury for Tax Analysis (2009–2012); and Assistant Secretary of the Treasury for Tax Policy (2012–2017). Eileen J. O’Connor: Assistant Attorney General of the United States, responsible for the Tax Division of the Department of Justice (2001–2007). Leslie Samuels: Assistant Secretary of the Treasury for Tax Policy (1993–1996). Stephen Shay: International Tax Counsel, U.S. Department of the Treasury (1986–1987) and Deputy Assistant Secretary of the Treasury for International Tax Affairs (2009–2011). George Yin: Chief of Staff, Joint Committee on Taxation (2003–2005).

Obstructing by Omission: The Troubling Expansion of the Criminal Offense of Obstructing the IRS and How DOJ Internal Policy Has Played a Role

A majority of circuits hold that it is possible to be convicted of corruptly obstructing the administration of the Internal Revenue laws even if there is no pending IRS proceeding to obstruct. Even more strikingly, the Second Circuit recently held that making an omission is sufficient to obstruct the IRS, which means that it is a federal felony to corruptly not maintain records or to corruptly not provide records to an accountant. Despite the obvious potential problems with these issues, there is very little recent scholarship addressing them. In June, the Supreme Court granted certiorari to consider these issues. This article examines the circuit split over whether 26 U.S.C. § 7212(a), interfering with the administration of the Internal Revenue laws, requires that the defendant obstructed a known IRS proceeding. Only the Sixth Circuit has imposed such a requirement, and even that court has twice reversed itself on the issue. Further, the Department of Justice limits charges under § 7212(a) to conduct that is prototypically “obstructive.” These policy limitations have caused only prototypically obstructive cases to reach the courts, and have therefore ensured that constitutional overbreadth challenges to the statute necessarily fail. Notwithstanding the majority of opinions on the issue, this article explains that the logical reading of § 7212(a) requires that, to obstruct the IRS, the defendant must have been aware of a pending IRS proceeding. Without this requirement, other crimes carefully delineated in the federal tax code would become superfluous, and individuals would be subject to a vast new array of previously uncontemplated criminal tax prosecutions. Moreover, this limitation is consistent with the Supreme Court’s interpretation of the nearly-identical general obstruction of justice statute. Unless § 7212(a) is limited to conduct that obstructs a pending IRS action, the statute will be unconstitutionally overbroad.

Deafening Silence or Noisy Whisper: Omission Bias and Foregone Revenue Under the WTO Agreement on Subsidies and Countervailing Measures

This article applies the behavioural economics theory of Omission Bias to the Agreement on Subsidies and Countervailing Measures (ASCM) of the World Trade Organization (WTO), assessing whether WTO and Appellate Body’s assessment of ‘foregone revenue’ as illegal subsidies indicate a bias against finding culpability in omissions as distinct from commissions. Using available case law, the article shows that there is no evidence of Omission Bias among WTO adjudicator’s in terms of their rulings, but rather the case law discloses evidentiary and practical problems which may prevent the instigating and enforcing of claims of this nature. Specifically the test for this kind of subsidization is complex and its application is frustrated by the lack of tax expertise among WTO panellists and Appellate Body members as well as the opacity in many countries’ revenue and tax incentive regimes. The article concludes by acknowledging the need for greater transparency in domestic revenue laws and the more ready use of expertise in tax relief cases in the WTO dispute settlement system.

Compromising Compliance? The IRS Offer in Compromise Program and Opportunities for Reform

Internal Revenue Code section 7122 provides that “the Secretary may compromise any civil or criminal case arising under the internal revenue laws . . . .” This simple language supplies a statutory hook for the Internal Revenue Service’s (IRS’s) “Offer in Compromise” (OIC) program, one of the most important collection alternatives available for taxpayers who dispute an assessed liability or who acknowledge their debt but cannot afford to pay in full. Through the OIC program, the IRS aims to achieve collection at the earliest possible time and at the least cost to the Government while simultaneously creating for the taxpayer an expectation of a fresh start toward future tax compliance.Unfortunately, public perception may not correspond with the IRS’s goals. A casual Internet search reveals dozens of websites promising to settle tax debts for pennies on the dollar, and “offer mills” across the nation promise a quick, cheap resolution and minimal contact with the IRS — a “get-out-of-jail-free” card without further consequences. To date, the IRS has done relatively little to counter the offer-mill hype or take back the narrative.This paper argues that, with some careful adjustments, the OIC program could become a powerful compliance mechanism. The key is to treat the OIC process as an opportunity for robust taxpayer education. Drawing on the scholarly literature regarding compliance norms and on sociological research concerning poverty concentration, the paper proposes that an education-driven OIC model could transform taxpayer-offerors into ambassadors who promote norms of tax compliance in low-income communities where traditional IRS messaging has failed. The paper offers a five-part strategy, with a balance of “carrots and sticks,” to achieve this positive compliance outcome.

The Penal and Revenue Rules, State Law, and Federal Preemption

Under two longstanding rules, U.S. courts will not enforce the penal and revenue laws of foreign nations, nor the judgments of foreign courts based upon such laws. Both the penal and revenue rules are rules of common law. But are they rules of state common law or federal common law? Some federal courts have held that the revenue rule is federal common law and preempts inconsistent state law. This essay argues, to the contrary, that the penal and revenue rules — like other rules concerning the conflict of laws and the enforcement of foreign judgments — are rules of state law. Building on Justice Harlan’s concurrence in Zschernig v. Miller, I offer a narrower theory of preemption based on clear federal policies expressed in U.S. treaties. Under this theory, States would be precluded from enforcing foreign tax claims, for example, but could recognize foreign convictions as bars to subsequent prosecutions for the same offense, as some state double-jeopardy statutes have done.

The Fiscal Till and Other Novel Ways to Prevent Tax Evasion: Any Relevance for Improving Tax Compliance in New Zealand?

The cash economy and associated tax evasion is an on-going issue for most tax administrators. Tax evasion reduces national tax revenue, shifts the tax burden on to other taxpayers such as salary/wage earners and undermines confidence in the tax system affecting voluntary compliance as well as the competitiveness of honest businesses.Some sectors of the economy are dominated by small traders who do most of their sales in cash. These sectors are often associated with high levels of tax evasion through the suppression of cash sales. In response to this problem an increasing number countries have legislated for traders in certain industry sectors to use approved electronic cash registers or data processing systems which print customer receipts as well as record sales in a secure electronic memory which can be audited or monitored by tax authorities. While New Zealand’s revenue laws require taxpayers to maintain certain records, there is no legislative requirement to employ any type of electronic data processing equipment to do so. Even when they do, they are not required to use ones with features to facilitate tax audits or outside verification and taxpayers have an unfettered choice in the equipment (if any) they employ to maintain accounting records. This paper explores the issue of whether the measures enacted in Europe and North America would be effective in New Zealand to reduce tax evasion in the small business sector. The experience of these European and North American countries will be examined as well as the compliance model and strategy adopted by the New Zealand Inland Revenue Department.

Triangular Landscapes: Environment, Society, and the State in the Nile Delta under Roman Rule by Katherine Blouin

200 PHOENIX been given to the particular Roman understanding of jurisdiction and magistrate’s discretion . Another major theme of this chapter is the use of “‘signalling’ words” (151) to situate complaints within the legal system, which is central to an exemplary discussion of the development of a petition from draft to clear copy (P.Cair.Goodsp. 15). In Chapter Six he is concerned with the use of violence “to redefine and restructure . . . interpersonal relationships” (201), arguing that it was often used “in a symbolic, public, and communicative way” (176). Particular attention is paid to family relations, with a careful case study of the conflicts of Aurelia Taesis (P.Cair.Isid.). Bryen’s approach is influenced by Chris Wickham’s important study of Courts and Conflict in Twelfth-Century Tuscany (Oxford 2003), in which courts are conceived as “social drama” aimed at creating local consensus; another fruitful mediaevalist comparandum is now provided by the work of Hannah Skoda (Medieval Violence: Physical Brutality in Northern France 1270–1330 [Oxford 2013]) on “violence as communication.” The monograph is accompanied by two appendices. The first (209–212) is a brief but lucid introduction to papyrological practices for a lay person, aimed at emphasizing the uncertainties behind the printed text. The second (213–280) is a translation of 135 legal documents concerning violence, including all the extant petitions, and a few other related pieces, effectively a mini-sourcebook. It is arranged in roughly chronological order from BGU IV 1105 (11/10 b.c.) to SB VI 9239 (a.d. 548). This will no doubt be the part of the book most in use for the purposes of undergraduate teaching, and as far as this reviewer has been able to check, there are remarkably few slips; in 251, no. 83 (SB IV 7464), for Valerius Titianus read Valerius Titanianus, and the translation of \p’tropow with “procurator” seems misleading in English for a private estate manager. An important treatment of violence in the law of papyri by H.-A. Rupprecht (“Hybris: Anmerkungen zu einem Delikt in den Papyri der ptolemäischen und römischen Zeit,” in S. Buchholz et al. [eds.], Überlieferung, Bewahrung und Gestaltung in der rechtgeschichtlichen Forschung [Paderborn 1993] 269–275), and the analysis of SB XII 10929 (somewhat misleadingly discussed at 150–151) by A. Jördens (“Eine kaiserliche Konstitution zu den Rechtsprechungskompetenzen der Statthalter,” Chiron 41 [2011] 327–356) should have been added to the bibliography. General index and index locorum are lumped into one, with no great loss to convenience; less conveniently, it seems to exclude the papyri not in Appendix II (e.g., P.Lips. I 40, discussed on 136, where Keenan’s translation quoted misses “After he had been spared” at the beginning of the last sentence). Bryen has achieved an impressive combination of a sophisticated theoretical framework and close readings of the papyri. His book opens up a new field of study and it ought to be read and reflected upon by anyone who is interested in the place of law and justice in Roman social history. It is to be hoped that it will generate further fruitful debate. St John's College, Oxford Georgy Kantor Triangular Landscapes: Environment, Society, and the State in the Nile Delta under Roman Rule. By Katherine Blouin. Oxford: Oxford University Press (Oxford Studies on the Roman Economy). 2014. Pp. xxvi, 429. Although Egypt is the richest place in the ancient world for preserved papyri documents, papyri do not survive well in the damper conditions of the Nile Delta. An unusual concatenation of circumstances has resulted in the existence of ninety papyri for the city of Thmouis in the Mendesian nome (administrative district) of the eastern BOOK REVIEWS/COMPTES RENDUS 201 Delta, covering the third century b.c. to the fourth century a.d. Most remarkable is the Carbonised Archive of Thmouis (CAT) consisting of around seventy fragments, but there are also fifteen documents of the Zenon archives dealing with this area during the second century b.c., the Revenue Laws papyrus and P. Oxy. XLIV 3205, a land sowing register from the early fourth century a.d. concerning the nome. Using this rare archive, Katherine Blouin has been able to construct...

Decoupling Taxes and Marriage: Beyond Innocence and Income Splitting

Fourteen years ago, members of Congress sympathetically listened as divorcees testified to their struggles to raise children while being pursued by the Internal Revenue Service for tax debts, often unknown to them, that were attributable to their ex-husbands' income. Rather than adopting one of many proposals to end joint and several liability, Congress instead elected to expand the grounds on which these individuals could seek relief from such liability. Since that time, taxpayers have seen a steady expansion of the grounds for so-called “innocent spouse relief” that has evolved through a combination of legislative, administrative, and judicial action. Yet the process for relief remains timeconsuming, inefficient, and unpredictable. The majority of initial requests for innocent spouse relief are denied. The taxpayer can appeal administratively and also seek judicial review if relief is denied, but sometimes will spend several years and untold resources in pursuit of a claim that may ultimately be unsuccessful. The process is also a questionable use of Internal Revenue Service personnel, in that it frequently calls upon these employees to address the most intimate aspects of a failed relationship, including spousal abuse, addictions, and mental health problems. These employees often must make a determination based upon a “hesaid, she-said” presentation of the facts—an odd task for an agency charged with enforcing the revenue laws. This article visits the historic rationales for joint and several liability, both in light of the flawed relief process and also in the context of modern-day American society, in which married couples constitute only half of all households and cohabitation is increasingly more common. I conclude that Congress should eliminate the “married” filing statuses and require each married individual to file a separate return. If it did so, joint liability and the innocent spouse relief process would both cease to exist. The historical policy justifications for imposing joint and several liability are no longer rational in light of changed demographics and technological advances. Rather than an “unusual privilege,” which it was long said to be, filing jointly has become a risky conundrum, particularly for low-income taxpayers. As the nation debates tax reform, it is * Associate Clinical Professor of Law and Director, Tax Clinic, Washington and Lee University School of Law. I would like to extend my thanks to the Frances Lewis Law Center for research support, as well as the following people who provided helpful feedback at varying stages of the project: Robin LeBlanc, Keith Fogg, and Caroline Chen. I also thank Emerald Smith, William Harrison, and Darby Gooding for their research assistance. 2012] DECOUPLING TAXES AND MARRIAGE 95 appropriate to rethink the policy of retaining the “married” filing statuses in light of the ways in which family structures, society, and the Internal Revenue Code have changed since joint and several liability was introduced in 1938. 96 COLUMBIA JOURNAL OF TAX LAW [Vol.4:94

Institutional Reform In Tax Enforcement: An Analysis Of The Mauritius Revenue Authority Following The Tax Reform Of July 2006

Over the years Mauritius has been emerging as one of the strongest economies in Sub-Saharan African countries. The Mauritian Government, as part of its initiatives to craft Mauritius as a more diversified, open and internationally integrated economy, has updated its tax system. The objective of the Mauritius Revenue Authority (MRA), as an agency of the State for revenue collection and the administration of revenue laws, is to transform revenue administration in Mauritius so as to meet international standards. The main aim of this study is to assess the effectiveness of the MRA following the tax reform of July 2006. Relevant literatures were included in this study providing an understanding of the issues and alternatives involved in the tax reform. A modified questionnaire was developed dividing into two parts, covering the eight aspects to measure the effectiveness and efficiency of the MRA. Data collected was analyzed using the Statistical Package for the Social Sciences Software, specifically the Cronbachs Alpha, the Pearsons Correlation analysis and the Cross Tabulation analysis. Based on our findings this study has found that the MRA has been successful in implementing different reform strategies and has brought a clear understanding of the Tax reform to which it brought positive results to the MRA.

A critical analysis of the barriers to entry for small business owners imposed by Sections 12E(4)(a)(iii) and (d) and paragraph 3(b) of the Sixth Schedule Of The Income Tax Act, No. 58 of 1962

According to National Treasury’s Explanatory Memorandum on the Revenue Laws Amendment Bill, 2008, small businesses in South Africa are instrumental in the growth of the South African economy as they are a source of job creation and a counter to poverty. Research, however, indicates that small businesses face many obstacles, such as relatively high tax compliance costs. It was, therefore, proposed in the 2008 Budget Review that a turnover tax system be implemented for micro businesses with a turnover of up to R1 million per annum to simplify the tax compliance process. Similarly, section 12E was introduced earlier in the Income Tax Act No. 58 of 1962 to offer additional income tax relief to small business owners. Sections 12E(4)(a)(iii) and (d) and paragraph 3(b) of the Sixth Schedule, however, prevent certain small business owners from making use of these concessions. This article investigates these barriers to entry and explores possible solutions to the problems presented by them.

Ein ptolemäisches Gesetz zum Handel mit importiertem Wein (P.UB Trier S 188-61)

Editio princeps of a Ptolemaic papyrus containing a hitherto unknown customs law about imported wine, targetting the trade and transportation of undeclared wine. The fragment possibly belongs to the so called „Revenue Laws“.

Creation of a State Tax Court Would Be a Step Backwards for Taxpayers

THE CALIFORNIA Journal of Politics & Policy Commentary Creation of a State Tax Court Would Be a Step Backwards for Taxpayers Gerald M. Bonetto California State University, Los Angeles A. Introduction: Commission on the 21st Century Economy On October 30, 2008, Governor Arnold Schwarzeneg- ger signed Executive Order S-12-08 1 calling for the cre- ation of a bipartisan Commission on the 21st Century Economy (“Commission”) to re-examine and modernize California’s revenue laws. The commission ultimately consisted of 14 members, seven appointed by the gov- ernor and seven appointed by legislative leaders. At the signing, the governor asked the commission to step back from the current fiscal crisis and evaluate California’s tax www.bepress.com/cjpp Volume 2, Issue 1, 2010 structure. He wanted the commission to suggest changes to the revenue laws that would result in a more stable revenue stream and would better reflect California’s economy for the 21st century. The governor concluded that California’s “revenue stream is the epitome of boom or bust,” and that California needed a long-term solution to its revenue prob- lem in order to achieve ongoing fiscal stability. 2 B. Commission’s Findings In its report of September 29, 2009, the Commis- sion focused on California’s three main taxes—the per- sonal income tax, the corporation tax, and the sales and use tax—that constitute approximately 90 percent of the state’s General Fund. 3 The commission found that the tax system’s performance had become increasingly volatile and less diverse in terms of its revenue sources, primar- ily due to changes in the state’s economy and how these changes impact the tax system. 4 When the basic elements of the tax system were es- tablished in the 1930s, agriculture and manufacturing

Tax incentives for biodiversity conservation in the Western Cape

Biodiversity conservation tax incentives were inserted into the Income Tax Act 58 of 1962 in terms of the Revenue Laws Amendment Act 60 of 2008 and are now contained in section 37C. The objectives of this study were to quantify the maximum potential revenue loss, to National Treasury, as a result of these tax incentives granted to landowners in the Western Cape; to identify and discuss alternative policy instruments to encourage conservation; and to investigate the perceptions of landowners in the Western Cape on the tax and alternative incentives available for conservation. The study found that the maximum tax revenue foregone should amount to a tiny percentage of total estimated revenue income for the 2008/2009 fiscal year, while projected future losses could also be insignificant. Landowners prefer direct financial incentives and exemption from property taxes, and contend that direct assistance with conservation activities would also be beneficial. The use of municipal value in the valuation of land would promote objectiveness and consistency. Finally, only a third of the landowners indicated that tax incentives would encourage them to commit more land for conservation.

Editorial

Suggestions that offshore jurisdictions are somehow responsible for our current economic woes are largely misplaced. They overlook the high regulatory standards operated in many offshore jurisdictions and the fact that failed institutions—such as RBC and Lehman—were the subjects of onshore regulatory oversight. Two possible conclusions are that such criticisms have more to do with finding convenient scapegoats and trying to protect the tax base of onshore jurisdictions. The latter raises the philosophical question; what is so bad about tax competition? It is part of the rationale for the long established rule—articulated by Lord Mansfield in Holman v Johnson (1775)—that no country takes notice of the revenue laws of another. Competition is justified when the UK sets out to attract international capital with their benign approach to the taxation of non-domiciliaries. Initiatives such as those pursued by the OECD create a sense of injustice and of double standards. Such attention is particularly unwelcome at the present time, when offshore jurisdictions are struggling to come to terms with the effects of the economic hurricane.