Paul L. Caron
Dean




Tuesday, June 9, 2009

Conference on Comparative Tax Law and Culture

The three-day conference on Comparative Tax Law and Culture kicks off today at the Monash University Prato Centre in Prato, Italy.  The conference is sponsored by the Cegla Center for Interdisciplinary Research of the Law at Tel Aviv University and the Monash University Taxation Law and Policy Research Institute.  Here are today's presenters and their papers:

I. Taxation in Asia

From Mumbai to Shanghai, With a Side Trip to Hong Kong: The Future of Progressive Taxation in an Asian-Led World, by Michael Livingston (Rutgers-Camden):

Progressive income taxation--and western tax norms generally--have historically been extended to nonwestern nations when they reached an appropriate stage of economic development. Because of their size, self-confidence, and important cultural differences, China and India present a challenge to this time-honored process. This article will consider the issue above, beginning with a general survey of progressive taxation in developing countries and proceeding to more special issues affecting large Asian countries. These include, for China, an emphasis on collective rather than individual concepts of justice, a preference for administrative rather than legislative (or judicial) settlement of disputes, and the ambiguous legacy of Marxism; and, for India, the effects of the Hindu and Ghandian traditions as well as a loose federal system and relative lack of administrative resources. The article will conclude by considering the impact of these traditions and the broader question of whether the progressive income tax is an inevitable part of the "tax life cycle" or whether it varies across societies and cultures.

Commentator: Jinyan Li (Osgoode Hall Law School, York University)

Law as Culture: A Cross-cultural Inquiry of the General Anti-Avoidance Rule in China and Canada, by Jinyan Li (Osgoode Hall Law School, York University):

The main goal of this paper is to explore the idea of “law as culture”. More specifically, it examines the extent to which Western tax norms acquire their “Chinese” meanings. Through a case study of the general anti-avoidance rule in China and Canada, the paper demonstrates that the apparent commonality in legislative language can have different interpretations and effect in the Chinese and Canadian legal culture. However, the impact of culture differs with respect to different types of tax rules. For purposes of discussion, tax rules are classified as “technical” and “anti-avoidance” rules. While the application of the former is sensitive to cultural contexts, the later, such as the GAAR, can have opposite effect in China and Canada. The central argument of the paper is that the true meaning of some cross-culturally convergent rules can only be found in their local cultural contexts. The research for the paper draws from general comparative law scholarship and anti-avoidance literature as well as Canadian and Chinese tax literature. The analysis is mostly normative, although reference is made to some secondary empirical research on tax culture in China.

Commentator: Carlo Garbarino (Bocconi University Law Department)

Taxation in a “Socialist Market Economy”: How Globalisation and Modernisation Are Causing a Fundamental Shift in the Fiscal Relationship Between China’s Central Government and the Provincial Governments, by Li Jin (Jinan University) & Rick Krever (Monash University Faculty of Business and Economics):

While the shift from emperor feudalism to political fragmentation and warlordism through to rigid socialism brought significant political change to China, it did not fundamentally alter the relative powers of the provincial governments relative to the central government, in particular the significant role of local governments in providing public services and raising revenues to carry out local government functions. The longstanding balance between the central government and provincial governments may be in the process of changing, however, as the dual pressures of globalisation and modernisation force changes to the structure and administration of tax laws and to the division of revenues. If provincial governments are to continue to play important roles, a new system of fiscal federalism may be needed.

Commentator: Neil Brooks (Osgoode Hall Law School, York University)

II. Comparative Tax Politics and Tax Reforms

Applying Legal Theory to Comparative Taxation: The Evolutionary Structure of Tax Systems, by Carlo Garbarino (Bocconi University Law Department):

Comparative tax research primarily looks at legal transplants and domestic tax reforms which are viewed as the result of circulation of models among countries and thus amounts to an evolutionary approach which has very solid underpinnings in legal theory. The paper claims that legal theory is needed to pursue effective comparative research and provides a model of tax law which can be applied to all tax systems and which accounts for their evolutionary structure. The paper adopts analytical legal philosophy as the kind of theory of law which specifically serves the purpose of comparative tax analysis; it also evidences that comparative taxation is a type of analytical theory of law insofar as it provides an explicative framework for comparing local solutions which would be otherwise not comparable.

The paper looks both at the structure as well as the evolution of tax systems using tenets of the network theory to provide a general model of tax law and shows how this general model can be used to carry out comparative analysis of any tax system by suggesting applications and providing examples.

The paper separately discusses the structure and the evolution of tax systems. The structure of tax law is defined by hierarchies of tax rules (chains of validity) through the adoption of a widely accepted model of the tax system based on the distinction between by primary and secondary tax rules, but which also encompasses general as well as singular tax rules. The evolution of tax law is defined by looking at the diachronic change of general and singular rules, as well as at the sinchronic coexistence of different sets of singular rules.

The paper goes on to show that comparative taxation must address the evolutionary structure of the tax systems which is the result of diachronic and synchronic change of both general and singular rules at the level of each country. The paper further discusses these aspects of comparative evolutionary analysis by defining legal adaptation with reference to the design and the fitness of legal structures and briefly discusses the circulation of tax models.

Commentator: Kathryn James (Monash University Faculty of Law)

Beggars and Bordellos on the Borders of Empire: Transplanting Colonial Income Tax Law to Mandatory Palestine, by Assaf Likhovski (Tel Aviv University Faculty of Law):

Tax law is a "technical" area of law which does not seem to be at first glace to be culturally-specific. It is thus seen as easily transferable between different societies and culture. On the other hand tax law is often highly contested politically, and it often reflects deep social and cultural structures. So is tax law universal or particular? Is it easily transferable between different societies and cultures or not?

This paper seeks to answer this question by analyzing one specific example -– the history of income tax legislation in Mandatory Palestine. This history reveals the dual nature of income taxation. On the one hand, the Income Tax Ordinance which was enacted by the British in Palestine in 1941 was based on a "one-size fits all" colonial model, and the lawyers involved in its enactment, in Palestine and the Colonial Office in London, made relatively little effort to adjust it to local conditions. One the other hand, other actors -– politicians involved the decision to impose income taxation in Palestine in the 1930s and administrators involved in the application of the Ordinance after it was enacted in the 1940s -– were very aware of the need to adapt the enactment and the specific economic, political, social and cultural conditions of Palestine.

Thus, while on a formal level the Ordinance seemed to represent a process in which the law of Palestine converged with the law of other British colonies and indeed with English income tax law, once we expand our framework and examine not just law in the books but also law in action, and actors such as politicians and administrators, we discover that particular local conditions were an important factor in the enactment and application of the Palestine Income Tax Ordinance.

Commentator: Michael Livingston (Rutgers-Camden)

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