Richard Krever

Intergovernmental financial relations in an age of austerity: implications for the future of federalism

The financial crisis that first disrupted global markets in 2008 may have been the defining global socio-economic event of the last decade, but the analysis in this volume suggests that the crisis and its aftermath is but one factor, albeit a significant one, shaping the evolution of federal systems. In this sense, this volume affirms existing research on comparative federalism that highlights the complex and particularistic nature of many federal settlements and their evolution over time (see, for example, Benz and Broschek 2013; Fenna 2014; Riker 1964; Stepan 1999). Indeed, the cases within this volume will disappoint those anticipating that the impact of the financial crisis on federal systems over time can be explained in terms of a handful of key variables. However, it accords with the growing recognition in federalism scholarship and institutional analysis more generally of the complex nature of social change and the way in which it is influenced by the socio-economic interdependence between states as well as the cultural, political and economic forces within national borders. This growing recognition of the complexity of federal dynamics has resulted in a research environment in which formal, deductive methods are losing favour (Hueglin 2011).

Media Use and Cultural Adaptation by Foreign Students in Chinese Universities

Abstract While there have been many studies of the relationship between cultural adaptation and media usage by immigrants to Anglo countries, there have been no studies published in English of media use by international students in China. Researchers investigating media use of international students in Dalian, China initially assumed outcomes consistent with results in other locations. Survey results revealed different patterns of usage, however, most likely attributable to the unique media environment in Chinese universities where the only television and newspapers readily available to students are state owned and provide only official perspectives on the news. Improvement of Internet access and provision of more Chinese newspapers and television stations to sets in student dormitories by universities might facilitate greater cultural adaptation by international students and improve their perceptions of study in China.

The impact of newspaper reports on fear of violent crime in Hong Kong

This study analyzed violent crime reports in three large circulation newspapers and tested by survey the relationship between newspaper reporting of crime and fear of crime. As was expected, there was a nexus between more sensationalist newspaper reporting and the public’s fear of crime. Unexpected findings were an inverse relationship between newspaper format and awareness of violent crime, and also between awareness of crime and fear of crime.

Theories of consumption and the consequences of partial taxation of financial services

While the VAT is technically a tax imposed on registered enterprises making taxable supplies, it is designed to be a consumption tax, borne by persons making acquisitions for final consumption. The initial step when designing a law intended to tax personal consumption is to determine what constitutes consumption. Two different understandings have emerged. The first, and broader, view defines consumption from the perspective of the individual making an expenditure—the application of economic resources for any purpose other than savings equates to consumption. The second relies on a societal view based on total consumption in a country: only when an individual uses real resources from the pool available to all participants in the economy does consumption occur. A consumption tax based on the first view will have a dramatically different scope from a consumption tax based on the second, as the example of the tax consequences of the making of a gift reveals. The two views of consumption yield different tax bases and also offer different perspectives of neutrality. The consequences of both views are also illustrated with a consideration of how current VAT rules applying to gambling and insurance fit into the two paradigms. Separately, while there is not universal agreement on the point, generally under both views of consumption the loan intermediary services provided by financial service providers should be subject to tax. Nevertheless, in almost every case, jurisdictions have followed the traditional VAT precedent of characterizing loan intermediary services (as well as the provision of intangible investment instruments) as exempt supplies. The partial taxation of exempt supplies, through the denial of input-VAT credits to persons acquiring these services and goods, gives rise to both theoretical and practical problems. A number of practical consequences are reviewed.

VAT and Financial Services

This book explains the theoretical and policy issues associated with the taxation of financial services and includes a jurisdictional overview that illustrates alternative policy choices and the legal consequences of those choices . The book addresses the question: how can financial services in an increasingly globalized market best be taxed through VAT while avoiding economic distortions? It supports the discussion of the key practical problems that have arisen from the particular complexity of the application of VAT to financial services, and allows for the evaluation of best practice by comparing the major current reform models now being implemented.

VAT and Financial Services: Comparative Law and Economic Perspectives

This book explains the theoretical and policy issues associated with the taxation of financial services and includes a jurisdictional overview that illustrates alternative policy choices and the legal consequences of those choices . The book addresses the question: how can financial services in an increasingly globalized market best be taxed through VAT while avoiding economic distortions? It supports the discussion of the key practical problems that have arisen from the particular complexity of the application of VAT to financial services, and allows for the evaluation of best practice by comparing the major current reform models now being implemented.

Taxing Loan Intermediary Services: Theory and Design Considerations

The most prevalent treatment of loan intermediary services in global VAT treatment is the characterisation of the services as exempt or input taxed supplies. It is almost universally recognized that this treatment is suboptimal in terms of VAT theory and outcomes, leading to compounding overtaxation of registered enterprises using the services and undertaxation of final consumers. Developing workable alternatives is a challenge, however. While some jurisdictions have adopted partial solutions for particular types of taxpayers or transactions—zero-rating some supplies, taxing others using additive methods to determine the base, recharacterizing finance leases as taxable supplies—no jurisdiction has successfully tackled the full problem. This chapter reviews the merits and drawbacks to the various alternatives that have been tried and proposed.

VAT and Financial Investments

The issues raised by VAT and financial investments may be the most challenging of all VAT and financial supplies to resolve. In a model VAT, there would be full recovery of all VAT associated with savings and investment. Three problems make it difficult to achieve this aim in respect of individuals’ investments. The first is that of expenses related to the acquisition of investments that may also be characterized as personal consumption expenses. The second is the fact that most savers are not registered for VAT purposes and it would be impossible to bring them all into the VAT net to refund input VAT related to savings. The third is the political implications of increasing the regressivity of the VAT by returning input VAT to savers. This chapter explores options to address these issues. It then considers the problem of VAT and company investments such as the VAT consequences when operating companies are owned by holding companies. Legislative options to address this issue are reviewed.

Loan Intermediary Services: China

Prior to May 1, 2016, the supply of loan intermediary services and many other services in China was subject to tax under a turnover tax regime known as the Business Tax. As a turnover tax, the system had a tax cascading effect, with suppliers unable to recognize input taxes incurred on acquisitions used to make their supplies. In 2016, China completed a reform process of shifting supplies taxed under the Business Tax to the VAT, becoming one of the only jurisdictions to apply a VAT generally to financial services. However, the Chinese VAT rules applicable to loan intermediary services are significantly different from the conventional VAT rules. A small number of bank-to-bank loans and loans from the central bank are treated as exempt supplies, free of tax but denying the lenders and borrowers input tax credits. Most other loans are fully taxed with gross interest payments used as the tax base, and neither the borrower nor lender are able to claim input tax credits in respect of the loan or related acquisitions. All these features replicate the cascading turnover tax outcome of the predecessor Business Tax.

GST and Insurance: Australia

Intermediary services related to the provision of casualty insurance (for losses other than life or health) are fully subject to GST in Australia. Tax is levied on the value of insurance premiums paid by registered and unregistered policy-holders. Registered enterprises (other than those making input taxed (exempt) supplies), claim offsetting input tax credits for GST imposed on the premiums. Settlements paid to unregistered claimants attract a notional input tax credit to the insurer and settlements paid to registered claimants are out of scope payments with no GST consequences. The final result is that GST is paid on intermediary services provided to both unregistered and registered enterprises. The GST paid on intermediary services to registered enterprises is fully recovered by the enterprises (except to the extent the insured enterprises make input taxed (exempt) supplies) through the ordinary tax invoice and credit system. More detailed rules ensure similar outcomes are achieved where settlements are made in kind, where reinsurance arrangements are in place, and when insurers operate through agents.