Tag Archives: companies
BP, Shell Biofuel Investments Hit Seven-Year Low
July 9, 2013 Big oil companies in Europe including BP and Royal Dutch Shell have cut back on biofuel research , which will slow efforts to find a sustainable alternative to gasoline that does not involve food-based supply, Fuel Fix reports. BP and Shell have stopped funding four different projects because they say the technology to generate fuel from woody plants and waste will not be economically viable until 2020 or later. This funding cut brought biofuel investments from a high of $7.6 billion in the last quarter of 2007 to a low of $57 million for the first quarter of this year — the lowest it has been since 2006. Such reductions will make it unlikely that the US and the EU will meet their targets to wean people off of gasoline any time soon, Fuel Fix says. The International Energy Agency says biofuels must supply 27 percent of the fuel for vehicles by 2050 so the US and EU can meet climate change targets. So far, most of the 1.9 million barrels of biofuel produced daily comes from corn or sugar, which in turn has pushed corn prices up and led to food-versus-fuel worries that this will take away food supplies from the poor. Research into next-generation biofuels may open up opportunities to tap non-food sources like jatropha, switch grass and corn stalks, and waste sources like paper. But BP and Shell, both considered among the most open to alternative fuels, scuttled their programs because they found their technologies could not be scaled up to commercial production levels in an economical manner. However, BP says it will continue to work with DuPont on biobutanol and has jointly opened a $520 million wheat-to-ethanol plant in the UK. In a parallel situation in the US, Exxon and Chevron have also cut back on biofuel spending . Chevron explored 100 feedstocks for viability before it shelved plans, while Exxon invested $100 million on algae but could not find a commercially viable solution, Fuel Fix reports. Global biofuels output last year fell for the first time since 2000 due to weakness in the US, BP reported last month. In May, the EPA proposed changes to the Renewable Fuel Standard program that include new renewable fuel pathways aimed at enhancing the ability of the biofuels industry to supply advanced biofuels, including cellulosic biofuels, to the market. Cellulosic biofuels will likely remain well below targets set by the Energy Independence and Security Act of 2007 , according to a February statement by the US Energy Information Administration. Continue reading
Don’t Blame The Havens – Tax Dodging Is Everyone Else’s Fault
http://www.ft.com/cm…l#ixzz2WlUNxAHS By John Kay Authorities have preferred to cut deals with big companies rather than pursue costly legal action ©Alamy The first time my research gained wide publicity was in 1979. In collaboration with another young academic, I explained that many large British companies paid no corporation tax. The issue resurfaces again as my co-author retires from the Bank of England. This week’s Group of Eight meeting produced denunciations of secrecy and tax havens. But the sources of the problem are not to be found in Bermuda or the Channel Islands. The activities that escape taxation take place in the G8. The correct starting point is the flawed structure and implementation of corporation tax in the G8 itself. Corporation tax is a levy on the profit a company earns for its shareholders. It is therefore both a tax on corporate activity and on shareholders, and it is not well designed to achieve either purpose. It is not robust administratively or economically. Complex and vulnerable to avoidance, it produces major distortions of both investment and financial decisions of companies. It makes sense to tax the incomes of shareholders. If it is desirable to tax separately the activities of companies, the most appropriate base is free cash flow, or economic rent – the amount a business earns in excess of its cost of capital. Almost every dispassionate examination of the structure of company taxation has favoured reform on these lines. Sir Mervyn King and I advocated it in 1979; the Mirrlees Review of the UK tax structure recently undertaken by the Institute for Fiscal Studies reached the same conclusion. There are several different ways of moving towards this result – removing interest deductibility, introducing an allowance for the cost of corporate equity or shifting the tax base towards cash flow rather than accounting profit – but all end up in broadly the same place. These reforms attempt to treat different levels of investment and different methods of financing in the same way. Opportunities for tax avoidance are everywhere and always the consequence of rules that treat economically similar transactions differently. It follows that there is generally alignment rather than conflict between the objectives of promoting economic efficiency and establishing administrative structures robust to avoidance. The present structure of company tax achieves neither. It would be best if these reforms could be undertaken on a co-ordinated international basis, but that is not essential: it is essential, however, to agree better rules for assigning tax revenues between jurisdictions. Since governments – even within the EU – have failed to co-ordinate rules on the principles that each taxes the worldwide income of “their” companies, there are opportunities to create revenues that are taxed nowhere and expenditures that are deductible more than once. Such avoidance is facilitated and enhanced by corporate manipulation of the prices at which capital, goods and services are transferred across borders. The resulting accounts show profit being earned in low-tax jurisdictions in which little or no real business takes place. It is disingenuous for companies to claim they pay the tax legally due when their assessments are based on accounts that defy economic and business realities. In the main, however, tax authorities have preferred to cut deals with big corporations rather than pursue costly legal action. They will not do the same for you and me. It makes no sense for a small company to pay an accountant to do anything but calculate the amount of tax that is properly due, or to incur legal fees resisting a challenge. The unacceptable outcome is an entirely correct perception that there is one law for the little guy and another for the big battalions. The potential effect of that perception on tax compliance is one that it is well worth spending millions of pounds to avoid. A serious reform agenda would involve a principled reappraisal of the basis for taxing corporations both nationally and globally, and a strategy for effective enforcement of existing rules. Such a strategy would make clear that executives of companies which present accounts to tax authorities that are essentially false, and the accountants who support them, will in future run serious risks. The door they hear closing behind them might be the door of a prison cell rather than the door of 10 Downing Street. johnkay@johnkay.com Continue reading
