¹ See D Williams, ‘Value Added Tax’ in V Thuronyi (ed), Tax Law Design and Drafting: Vol 1 (International Monetary Fund, Washington, 1996) 41.

² See A Ogley, Principles of Value Added Tax—A European Perspective (Interfisc Publishing, 1998) Chapter 5.

³ See AA Tait, Value Added Tax—International Practice and Problems (International Monetary Fund, Washington DC, 1988), at 92 f; and L Ebrill et al, The Modern VAT (Washington, International Monetary Fund, 2001) 94–97.

⁴ See A Schenk and HH Zee, ‘Financial Services and Value-Added Tax’, in HH Zee (ed), Taxing the Financial Sector—Concepts, Issues, and Practices (IMF, Washington DC, 2004) 64–74; Edgar, T, ‘Exempt Treatment of Financial Services Under Value-Added Tax: An Assessment of Alternatives’ (2001) 49 Canadian Tax Journal 1133–1219Google Scholar; Zee, HH, ‘VAT Treatment of Financial Services: A Primer on Conceptual Issues and Country Practices’ (2006) 34 Intertax 458–474, 462–466Google Scholar; and Alba, CER, ‘Taxation of Financial Services under the Value Added Tax: A Survey of Alternatives and Analysis of the Argentine Approach’ (1995) 6 International VAT Monitor 335–349.Google Scholar

⁵ See R Krever, ‘Designing and Drafting VAT Laws for Africa’ in R Krever (ed), VAT in Africa (Pretoria University Press, Pretoria, 2008) 9–28, 25–26.

⁶ GS Cooper and RJ Vann ‘Implementing the Goods and Services Tax’ (1999) 16 Sydney Law Review 2C.

⁷ See IBFD, Survey on the Recovery of Input VAT in the Financial Sector (December 2006).

⁸ European Commission, Consultation Paper on Modernising Value Added Tax Obligations for Financial Services and Insurances (DG Taxation and Customs Union Brussels, 2006). Available at http://ec.europa.eu/taxation_customs/resources/documents/common/consultations/tax/modernising_VAT_en.pdf

⁹ See PriceWaterhouseCoopers (PWC), Study to Increase the Understanding of the Economic Effects of the VAT Exemption for Financial and Insurance Services, Final Report to the European Commission, (November 2006).

¹⁰ Commission of the European Communities, Public Consultation on Financial and Insurance Services—Summary of Results (2007).

¹¹ Council Directive 2006/112/EC of 28 November 2006 on the Common System of Value Added Tax, [2006] OJ L347/1, hereafter ‘VAT Directive’.

¹² Sixth Council Directive 77/388 of 17 May 1977 on the Harmonization of the Laws of the Member States relating to turnover taxes—Common System of Value Added tax: Uniform Basis of Assessment, [1977] OJ L145/1, hereafter ‘Sixth VAT Directive’. In 2007, this Directive was amended and substituted by the current VAT Directive.

¹³ See Consultation Paper (n 8) 2.

¹⁴ Commission of the European Communities, The TCA System—A Detailed Description (2000); see de la Feria, R, ‘The EU VAT treatment of insurance and financial services (again) under review’ (2007) 2 EC Tax Review 74–89, 79–81.Google Scholar

¹⁵ OECD, Indirect Tax Treatment of Financial Services and Instruments (1998).

¹⁶ See Swinkels, J, ‘Combating VAT avoidance’ (2005) 4 International VAT Monitor, 235–246, 246.Google Scholar

¹⁷ Case C-453/93 W Bulthuis-Griffioen, [1995] ECR I-2341, para 19; and C-2/95 SDC, [1997] ECR I-3017, para 20, as regards the interpretation of the financial services exemption. See also, for other cases where the Court adopted a strict interpretation of exemptions: Case 253/85 Commission v United Kingdom [1988] ECR 817; Case 122/87 Commission v Italy [1988] ECR 2685; Case C-212/01, Unterpertinger [2003] ECR I-13859, all of which regarding the interpretation of the exemption applicable to medical services [art 132(1)(b)]; C-149/97 Institute of Motor Industry [1998] ECR I-7053, regarding the interpretation of the exemption applicable to trade unions [art 132(1)(l)]; and C-150/99, Stockholm Lindopark [2001] ECR I-493, on the interpretation of the exemption applicable to sport organizations [art 132(1)(m)].

¹⁸ See, amongst others, Cases C-76/99 Commission v France [2001] I-249; C-307/01 d'Ambrumenil, [2003] ECR I-13989; and C-106/05 Lup [2006] ECR I-5123, all of which regarding the interpretation of the exemption applicable to medical services [art 132(1)(b)]; C-216/97 Gregg [1999] ECR I-4947, on the interpretation of the exemptions applicable to medical services and that applicable to welfare and social work [art 132(1)(b) and (g)]; C-124/96 Commission v Spain [1998] ECR I-2501; C-174/00 Krennemer Golf [2002] ECR I-3293, both on the interpretation of the exemption applicable to sport organizations; and C-144/00 Hoffman [2003] ECR I-2921, regarding the interpretation of the exemption applicable to cultural services [art 132(1)(n)].

¹⁹ See Case C-141/00 Kluger [2002] ECR I-6833, on the interpretation of the exemptions applicable to medical services and that applicable to welfare and social work [art 132(1)(b) and (g)]. See also SDC, (n 17) above, at para 21, as regards the interpretation of the financial services exemption.

²⁰ Case C-169/04 Abbey National [2006] ECR I-4027, para 38. See also Cases 348/87 Stiching Uitvoering Financiële Acties [1989] ECR 1737, on the interpretation of the exemption applicable to independent groups of people [art 132(1)(f)]; C-498/03 Kingscrest Associates and Montecello, [2005] ECR I-4427, regarding the interpretation of the exemption applicable to welfare and social work [art 132(1)(g)]; and joint cases C-394/04 and C-395/04 Ygeia [2005] ECR I-10373, regarding the interpretation of the exemption applicable to medical services [art 132(1)(b)].

²¹ See Case C-443/04 Solleveld [2006] ECR I-3617, on the interpretation of the exemption applicable to medical services [art 132(1)(c)].

²² See Consultation Paper (n 8) 10.

²³ Case C-363/05 [2007] ECR I-5517, para 29.

²⁴ Case C-8/01 Assurador-Societetet [2003] ECR I-13711, para 75.

²⁵ See point II.3 below.

²⁶ Other relevant cases concerning the scope of these exemptions recently decided are: Joint Cases C-231/07, Tierce Ladbroke and C-232/07, Derby [2008] ECR 1-73; and Case C-29/08, AB SKF [2009] ECR 1-000, nyr.

²⁷ SDC (n 17) para 33. A similar approach was initially adopted as regards the interpretation of the exemption applicable to insurance transactions; see Case C-349/96 CPP [1999] ECR I-973.

²⁸ SDC (n 17) para 67. The ruling was welcomed by R Pincher, see (1998) British Tax Review 1, 64–74; but criticized by A Bugsgang and P Mason, see ‘VAT & Financial Services—Part 1: Sparekassernes Datacenter (SDC)’ [1999] The Tax Journal, 26 July, 17–20; and ‘VAT & Financial Services—Part 2: Consequences of the SDC case’ [1999] The Tax Journal, 2 August, 17–20.

²⁹ Case C-235/00 [2001] ECR I-10237, para 26.

³⁰ Case C-169/04 [2006] ECR I-4027, paras 70 and 71.

³¹ For a slightly different approach, see Swinkels, J, ‘Special Investment Funds and VAT’ (2006) International VAT Monitor 4, 247–253.Google Scholar

³² Opinion of Advocate-General Kokott, (n 20) paras 63 and 67.

³³ Case C-453/05 [2007] ECR I-5083.

³⁴ Volker Ludwig (n 33) paras 25 and 36.

³⁵ ibid paras 17–20.

³⁶ See point II.D below.

³⁷ See in particular CPP (n 27) above. Also, on the origins of the ‘ancillary doctrine’, see Parisi, PP, ‘Where does this ancillary doctrine come from? What is the thinking behind it?’ (2008) 8 Australian GST Journal 197–203.Google Scholar

³⁸ See Consultation Paper (n 8) 5.

³⁹ This has in fact been called ‘one of the most vexing problems facing financial institutions’, see A Schenk and O Oldman, Value Added Tax—A Comparative Approach (Cambridge University Press, Cambridge, 2007) 325.

⁴⁰ See in particular landmark Case C-98/98 Midland Bank [2000] ECR I-4177; and more recently, Case C-488/07 Royal Bank of Scotland [2009] ECR I-000, nyr.

⁴¹ For a commentary on the administrative and economic consequences of these discrepancies see Zacharopoulos, K, ‘Value-Added Tax: The Partial Exemption Regime’ (2001) 49 Canadian Tax Journal, 102–126.Google Scholar

⁴² See Consultation Paper (n 8) 7.

⁴³ Joint Cases C-487/01 and C-7/02, [2004] ECR I-5337.

⁴⁴ For an analysis of the meaning and catalysts for aggressive VAT planning, see de la Feria, R, ‘The European Court of Justice's Solution to Aggressive VAT planning—Further Towards Legal Uncertainty?’ (2006) 1 EC Tax Review, 27–35.Google Scholar

⁴⁵ Case C-255/02 [2006] ECR I-1607. For a more detailed analysis of the Halifax ruling see de la Feria, R ‘Giving themselves extra VAT? The ECJ ruling in Halifax’ (2006) 2 British Tax Review, 119–123Google Scholar; and Douma, S and Engelen, F, ‘Halifax plc v Customs and Excise Commissioners: The ECJ applies the Abuse of Rights Doctrine in VAT cases’ (2006) 4 British Tax Review 429–440.Google Scholar The ruling had a significant and somewhat unexpected impact upon EU law as a whole, and the development of the newly designated EC principle of prohibition of abuse of law, see ‘Prohibition of Abuse of (Community) Law—The Creation of a New General Principle of EC Law Through Tax’(2008) 2 CMLR 395–441.

⁴⁶ P Gottfried and W Wiegard go so far as to state that ‘contrary to common belief, VAT no longer equals a consumption tax when exemptions are granted’ in ‘Exemption Versus Zero-Rating—A Hidden Problem of VAT’ (1991) 46 Journal of Public Economics 307–328, 308. For a different approach, see Grubert, H and Mackie, J, ‘Must Financial Services Be Taxed Under a Consumption Tax?’ (2000) National Tax Journal 23–40CrossRefGoogle Scholar; Jack, W, ‘The Treatment of Financial Services Under a Broad-Based Consumption Tax’ [2000] National Tax Journal, 841–851CrossRefGoogle Scholar; and V Thuronyi, Comparative Tax Law (Kluwer Law International, The Hague, 2003) 322–324.

⁴⁷ See Butler, D, ‘VAT as a Tax on Consumption: Some Thoughts on the Recent Judgement in Parker Hale Ltd v Customs and Excise Commissioners’ (2000) 5 British Tax Review 545–553.Google Scholar

⁴⁸ Case C-378/02 [2005] ECR I-4685, para 38.

⁴⁹ Also known as ‘multiple taxation’, see De Wit, G, ‘The European VAT Experience’ (1995) 10 Tax Notes International 49–54.Google Scholar

⁵⁰ See Davis, EH and Kay, JA, ‘Extending the VAT Base: Problems and Possibilities’ (1985) 6 Fiscal Studies 1–16, 4.Google Scholar

⁵¹ See The EEC Reports on Tax Harmonisation—The Report of the Fiscal and Financial Committee and the Report of the Sub-Groups A, B and C (IBFD Publications, Amsterdam, 1963).

⁵² See Cnossen, S, ‘Is the VAT's Sixth Directive Becoming an Anachronism?’ (2003) European Taxation 12, 434–442, 435.Google Scholar

⁵³ See AA Tait (n 3) 50.

⁵⁴ See point 2.4 below.

⁵⁵ It has been noted that this bias is more intense in larger financial institutions, ‘as smaller financial firms will be more likely in general to outsource rather than provide services in-house’, thus perversely creating an additional layer of competitive inequality between larger and smaller firms, see A Schenk, ‘Financial Services’ in R Krever (ed), VAT in Africa (Pretoria University Press, Pretoria, 2008), 31–46, 40.

⁵⁶ The VAT Committee is set out in Article 398 of the VAT Directive. Although the opinions of the Committee are not binding, the Court has consistently reiterated that, where envisaged by the Directive, consultation is compulsory, see C-409/99 Metropol [2002] ECR I-81; and C-155/01 Cookies World, [2003] ECR I-8785.

⁵⁷ Recently approved amendments to the place of supply rules will most likely limit the scope of this bias from 2010, as the new main rule for B2B transactions will be taxation in the place where the supplier is established, see Council Directive 2008/8/EC of 12 February 2008 amending Directive 2006/112/EC as regards the place of supply of services, [2008] OJ L44/11; see also van Doesum, A et al. , ‘The New Rules on the Place of Supply of Services in European VAT’ (2008) 2 EC Tax Review 78–89.Google Scholar

⁵⁸ See Genser, B and Winker, P, ‘Measuring the Fiscal Revenue Loss of VAT Exemption in Commercial Banking’ (1997) 54 FinanzArchiv 563–585, 564–565.Google Scholar

⁵⁹ See Zee, HH, ‘A New Approach to Taxing Financial Intermediation Services Under a Value-Added Tax’ (2005) 53 National Tax Journal 77–92, 77–78.CrossRefGoogle Scholar Although, not all attribute such high levels of economic relevance to the financial services sector, its significance has been confirmed by European Commissioner Laszlo Kovacs, see presentation at a conference jointly organized by the Commission and the European Banking Federation on ‘Modernising the VAT Rules for Financial Services and Insurances’ held in Brussels on 11 May 2006, available at: http://ec.europa.eu/taxation_customs/common/archive/news/article_2541_en.htm.

⁶⁰ See Consultation Paper (n 8) 8.

⁶¹ Case C-472/03 [2005] ECR I-1719.

⁶² See Association of British Insurers' Press Release 101/05, 29 September 2005.

⁶³ See HM Revenue & Customs Business Briefs 11//05 and 23/05; and Irish Revenue E-Briefs Nos 3/2006 and 11/2006.

⁶⁴ Interestingly, the option for full taxation was excluded from the remit of the paper; for a critique of the rationale for this exclusion, see R de la Feria (n 14) 87–89.

⁶⁵ Essentially similar to the New Zealand GST model, see Maples, AJ., ‘Zero-Rating Rules for Financial Services in New Zealand—A Review of the Legislation and Revenue Guidelines’ (2006)21 Journal of International Banking Law and Regulation 399–408Google Scholar; and M Pallot ‘GST and Financial Services—Rating Zero-Rating’ in R Krever and D White (eds), GST in Retrospect and Prospect (Thomson Brookers, Wellington, 2007) 163. The introduction within the EU of a system similar to the New Zealand model, has already been suggested by H. Huizinga, but questioned by S Claessens, FS Morton, and a group of panellists, see Huizinga, H, ‘Financial services VAT—VAT in Europe?’ [2002] Economic Policy, October, 499–534, 526–533.Google Scholar

⁶⁶ See (n 8) 17–20.

⁶⁷ See Summary of Results (n 10) above.

⁶⁸ See PWC (n 9) 46.

⁶⁹ Proposal for a Council Directive Amending Directive 2006/112/EC on the Common System of Value Added Tax, as regards the treatment of insurance and financial services, COM(2007) 747 final, 28 November 2007; and Proposal for a Council Regulation Laying Down Implementing Measures for Directive 2006/112/EC on the common system of value added tax, as regards the treatment of insurance and financial services, COM(2007) 746 final, 28 November 2007.

⁷⁰ See R de la Feria and B Lockwood, ‘Opting for Opting In? An Evaluation of the Commission's Proposals for Reforming VAT for Financial Services’ Oxford University Centre for Business Taxation WP 09/09, July 2009.

⁷¹ See Consultation Paper (n 8) 15–16.

⁷² See s 9-30 and s 38-1, A New Tax System (Goods and Services Tax) Act 1999, hereafter ‘GST Act 1999’.

⁷³ See s 9-30 and s 40-1, GST Act 1999.

⁷⁴ The new terminology has been criticized in Australia itself by R Stitt, see ‘GST and Financial Services’ Paper presented at the ‘Financial Services Taxation Conference—Australasian Perspectives’ held by the Australian Tax Institute, at Queensland on 7–9 February 2001.

⁷⁵ Dealt with very briefly (see later for why this is so) in subdiv 40A, GST Act 1999. The others are Residential rent; residential premises; precious metals; school tuckshops and canteens; and fund raising events by charitable institutions.

⁷⁶ See James, K, ‘We of the “Never Ever”: The History of the Introduction of a Goods and Services Tax in Australia’ (2007) 3 BTR 320–348.Google Scholar

⁷⁷ By Act 177 of 1999.

⁷⁸ See subdiv 40-A, A New Tax System (Goods and Services Tax) Regulations 1999, hereafter ‘GST Regulations 1999’.

⁷⁹ See Dept of Innovation, Industry, Science and Research http://www.innovation.gov.au/GO/IndustrySectors/FinancialServices/Pages/GoodsAndServicesTax.aspx (accessed 3 April 2008).

⁸⁰ Reg 40-5.06, GST Regulations 1999.

⁸¹ See ‘Examples of interests’ in Reg 40-5.06, GST Regulations 1999.

⁸² Reg 40-5.07, GST Regulations 1999.

⁸³ Reg 40-5.09, GST Regulations 1999.

⁸⁴ Reg 40-5.12, GST Regulations 1999.

⁸⁵ Reg 40-5.08(2), GST Regulations 1999.

⁸⁶ Delightfully abbreviated as ‘the FAT’ by Australian practitioners.

⁸⁷ Section 11-15(4), GST Act 1999.

⁸⁸ S 189-15, GST Act 1999.

⁸⁹ S 189-5, GST Act 1999.

⁹⁰ As required by s189-5, GST Act 1999.

⁹¹ S 189-10, GST Act 1999.

⁹² S 189-1, GST Act 1999.

⁹³ See s 70-1, GST Act 1999.

⁹⁴ S 70-5(1), GST Act 1999 (emphasis in original).

⁹⁵ The stated intention of the reduced input tax credit regime see par 5.2 Further Supplementary Explanatory Memorandum to A New Tax System (Goods and Services Tax) Bill 1998. Available at http://law.ato.gov.au/atolaw/view.htm?DocID=NEM%2FSM99006%2FNAT%2FATO%2F00006 (accessed June 2008).

⁹⁶ Reg 70-5.03, GST Regulations 1999. The original belief was that the reduced input tax credit would be 70 per cent at the time that this regime was being discussed with major financial service providers—this may account for the Division and the corresponding regulations being number 70. Such coincidences in the Australian GST law are not uncommon, the simplified accounting methods introduced to reduce the compliance costs of small retailers making mixed supplies are to be found in Div 123 of the Act.

⁹⁷ Reg 70-5.02, GST Regulations 1999.

⁹⁸ Reg 70-5.02B, GST Regulations 1999.

⁹⁹ GSTR 2004/1 Goods and Services Tax: Reduced Credit Acquisitions. The Ruling should be read together with GST Ruling GSTR 2002/2 which deals with financial supplies more generally.

¹⁰⁰ See Edmundson, P, ‘GST, Financial Supplies and Reduced Input Tax Credits’ (2003) 6 Tax Specialist 118.Google Scholar

¹⁰¹ See S Barkoczy, P Edmundson, E la Grange, A MacIntyre, A MacRae, P McCouat, P McMahon, J Mendel, B Page, J Thompson and J Tyler, CCH GST Guide Commentary (CCH, Australia, 2008).

¹⁰² S Barkoczy et al (n 102) para 30–210. The Commissioner's view is expressed in GSTR 2004/1, para 87.

¹⁰³ S Barkoczy et al (n. 102) para 30–220.

¹⁰⁴ S Barkoczy et al (n 102) para 30–260. They point out that para 438 of GST Ruling GSTR 2004/1 states that litigation for the purposes of establishing the existence of a debt does not fall within the relevant RITC.

¹⁰⁵ Edmundson (n 101) 116.

¹⁰⁶ Penning, R, ‘Financial Supply Facilitators—a Friend in Deed’ (2005) 5 Australian GST Journal, 33, 37–39.Google Scholar

¹⁰⁷ Edmundson (n 101) 118.

¹⁰⁸ ibid.

¹⁰⁹ ibid.

¹¹⁰ See Hill, P, ‘Characterisation of Supplies (2001) 1 Australian GST Journal 21.Google Scholar

¹¹¹ ibid.

¹¹² See Edmundson (n 101) 118.

¹¹³ P Hill, A Carey, J Davidson, I Murray-Jones and P Stacey, Australian GST Handbook (Australian Tax Practice, 2005).

¹¹⁴ ibid para 25–310.

¹¹⁵ ibid para 25–310.

¹¹⁶ GST Ruling GSTR 2003/9.

¹¹⁷ Section 189-15, GST Act 1999 (emphasis added).

¹¹⁸ A point also made by P Hill et al (n 114) para 25–310.

¹¹⁹ GST Ruling GSTR 2006/3.

¹²⁰ Ruling GSTR 2006/3 also concedes that the mere fact that a favourable apportionment method is used will not, of itself, be regarded as avoidance susceptible to the general anti-avoidance rule in Div 165 of the Act.

¹²¹ Re VCE v FCT [2006] AATA 821.

¹²² See however comments by Pier on the implications of the principles developed by the ECJ to combat aggressive tax planning to Australian financial supplies in the context of Div 165, ‘Fusion of outputs and fractionation of inputs in financial services’ (2008) 8 Australian GST Journal 173–179.

¹²³ See Register of Private Binding Rulings http://www.ato.gov.au/rba/search.asp (accessed September 2008).

¹²⁴ A ‘deep content’ search for financial supplies yields 919 ‘hits’.

¹²⁵ See http://www.ato.gov.au/atp/pathway.asp?pc=001/008/001&mfp=001/008&mnu=4846#001_008_001 (accessed September 2008).

¹²⁶ The nine GST schemes identified in the period from 2001 to 2008 are: TA 2004/2—Avoidance of Goods and Services Tax (GST) on the sale of new residential premises; TA 2004/1—Non-arm's length arrangements using Goods and Services Tax (GST) cash/non-cash accounting methods to obtain a GST benefit; TA 2004/9—Exploitation of the second-hand goods provisions to obtain Goods and Services Tax (GST) input tax credits; TA 2004/8—Use of the Going Concern provisions and the Margin Scheme to avoid or reduce the Goods and Services Tax (GST) on the sale of new residential premises; TA 2004/7—Use of the Grouping provisions and the Margin Scheme to avoid or reduce the Goods and Services Tax (GST) on the sale of new residential premises; TA 2004/6—Use of the Grouping provisions of the GST Act to avoid Goods and Services Tax (GST) on the sale of new residential premises; TA 2005/4—Creation of Goods and Services Tax (GST) input tax credits by barter exchanges; TA 2007/1—Lease by a charitable institution to an associated endorsed charitable institution designed to gain input tax credits; and TA 2008/17—Claims for GST refunds beyond four years arising from the reclassification of a previously taxable supply as GST free.

¹²⁷ The general anti-avoidance provision in the Australian GST law (Div 165) is based on a similar and highly successful provision in the income tax law. For an early discussion see Hill, G, ‘GST Anti-Avoidance Division 65’ (1999) 2 Journal of Australian Taxation 295–311.Google Scholar

¹²⁸ Edmundson (n 101) 114.

¹²⁹ Edmundson (n 101) 115.

¹³⁰ As S Poddar comments, the Australian GST system ‘preserves the base amount of cascading, but minimises incremental cascading when financial services are outsourced’ see ‘VAT & Financial Services—A Workable Compromise’ in R Krever and D White (eds), GST in Retrospect and Prospect (Thomson Brookers, Wellington, 2007) 179–210, 187.

¹³¹ The stated intention of the reduced input tax credit regime see para 5.2 Further Supplementary Explanatory Memorandum to A New Tax System (Goods and Services Tax) Bill 1998. Available at http://law.ato.gov.au/atolaw/view.htm?DocID=NEM%2FSM99006%2FNAT%2FATO%2F00006 (accessed June 2008).

¹³² J Benson and C Littler, ‘Outsourcing and Workforce Reductions: An Empirical Study of Australian Organizations’ (2002) 8 Asia Pacific Business Review, 16–30.

¹³³ See Consultation Paper on the Review of the Financial Supply Provisions, 12 May 2009, availabe at: http://www.treasury.gov.au/documents/1529/PDF/Review_of_the_Financial_Supply_Provisions.pdf (accessed 18/9/09).

¹³⁴ See submissions at: http://www.treasury.gov.au/contentitem.asp?ContentID=1630&NavID= (accessed 18/9/09).

¹³⁵ See the submission of the Institute of Chartered Accountants in Australia as above.

¹³⁶ The Institute of Chartered Accountants in Australia, CPA Australia, the Taxation Institute of Australia.

¹³⁷ Edmundson (n 101) 120.

¹³⁸ Edmundson (n 101) 119. Against, see P Parisi, invoking foreign courts rulings, such as those from the UK, Canada, and the ECJ, to assess impact in Australia of common problems like apportionment of input tax, in ‘Input Tax Issues Continue to Perplex in Financial Services’ (2008) 8 Australian GST Journal 242–251.

¹³⁹ For an apparently opposite view, see Edmundson, P, ‘GST and Financial Supplies: A Comparative Analysis of Legislative Structure’ (2001) 30 Australian Tax Review 132–146.Google Scholar

¹⁴⁰ Osgood, RK, ‘The Convergence of the Taxation Systems of the Developed Nations’ [1992] Cornell International Law Journal, 339–347, 339 and 343 f.Google Scholar

¹⁴¹ Of all OECD countries only one, the United States, does not apply a VAT system, see OECD, Consumption Tax Trends—VAT/GST, Excise and Environmental Taxes (OECD, Paris, 2001). Moreover, even in the United States the ongoing debate on whether to introduce a VAT system has recently intensified, see latest report by the United States Government Accountability Office, Value Added Taxes—Lessons Learned from Other Countries on Compliance Risks, Administrative Costs, Compliance Burden and Transaction, April 2008.

¹⁴² T Edgar better summarizes the tax policymakers technique at play: ‘modify the application of exemption through partial reform alternatives intended to suppress one of the perceived distortions’ in ‘The Search for Alternatives to Exempt Treatment of Financial Services Under a Value-Added Tax’ in R Krever and D White (eds), GST in Retrospect and Prospect (Thomson Brookers, Wellington, 2007), 131–161, 147.

¹⁴³ Realisation of these limitations has led R Stitt to comment that ‘while Australia's reduced input tax credit system does partially address the problem of self-supply bias, its benefits are not so compelling that it is likely to be adopted by New Zealand or any other jurisdiction with an existing VAT/GST system, see ‘Financial Supplies and Reduced Input Tax Credits’ in R Krever and D White (eds), GST in Retrospect and Prospect (Thomson Brookers, Wellington, 2007), 205–210, 210.

¹⁴⁴ See point 2.4 above.

¹⁴⁵ See Commission of the European Communities, VAT Rates Applied in the Member States of the European Community, Situation at 1^st Jan 2008, DOC/2412/2008.

¹⁴⁶ See DP Dolowitz and D Marsh, ‘Learning from Abroad: The Role of Policy Transfer in Contemporary Policy-Making’ (2000) 13 Governance: An International Journal of Policy and Administration 5–24.

¹⁴⁷ See RK Osgood (n 136) 346.