Time period Short-run ..........

Pure competition Little, if any shitting and through industry forces only

Pure monopoly Shifting, to varying degrees Possible through firm monopoly po er

Long-run................ full shifting, and through industry forces only (Constant cost conditions)

Shifting, to varying degrees Possible through firm monopoly po er

The long run apart from the !C !" point due to the possible presence of monopoly profits. Thus, an imperfectly competitive firm hich is not operating at the profit-ma#imi$ing point ill be in a position to possibly shift a corporation (business) income ta#, if there e#ists a buffer area of unreali$ed profits ithin hich price-output rearrangements cart be made. %igure &-', hich is described later, demonstrates this phenomenon. %irst, ho ever, the critical (uestion must be as)ed* +hy ould a firm choose not to ma#imi$e profits at the !C , !" point- Such considerations as imperfect mar)et and production )no ledge, the fear of antitrust action, the fear of an unfavorable public image, the fear of attracting ne entrants t o the industry, the %ear .f Stimulating union age demands, and public utility regulation may prevent a fine or benchmar)s as* ma#imi$ation of gross receipts (sales)/ achievement of a target rate of return on investment/ maintenance of stable prices on goods produced by the firm/ application of a percentage mar)up price over

%igure &-'

0nreali$ed profits as a necessary contrition for shifting a business income ta# by a firm in impeded competition

1#planation* "ectangle P23C, !a#imum profits here !C , !" at output 4 hich is a position of suboptimal profits.

"ectangle P561C, profits at output 47

The e#cess of P23C over P81C - 0nreali$ed Prate. thus allo ing the possibility of shifting the burden of a profits ta# as price is increased to ard P and output is decreased to ard the profit ma#imi$ation output 4

Price elasticity Price elasticity of product demand.

9n %igure &:;, the S curve represents the supply and curve 6 represents the demand for the good. Constant-cost conditions of supply are assumed. 9n %igure &-;a, demand is relatively elastic throughout the relevant portion of the demand curve, hile in %igure &-;b demand is relatively inelastic throughout the relevant portion. 9n %igure &-;c, the demand for the good is perfectly (completely) inelastic throughout the entire curve. +hen the e#cise ta# is imposed, the price of the good is initially increased by the amount of the- ta# -< The most li)ely occurrence of ta# shifting is sho n in %igure &-;c, here the demand is perfectly inelastic, since there is no (uantity reaction as the price increases from p to p. The initial (uantity. 4, and the post ta# (uantity. Tax shifting and elasticity

9n %igure &:;, the S curve represents the supply and curve 6 represents the demand for the good. Constant-cost conditions of supply are assumed. 9n %igure &-;a, demand is relatively elastic throughout the relevant portion of the demand curve, hile in %igure &-;b demand is relatively inelastic throughout the relevant portion. 9n %igure &-;c, the demand for the good is perfectly (completely) inelastic throughout the entire curve. +hen the e#cise ta# is imposed, the price of the good is initially increased by the amount of the- ta# . The most li)ely occurrence of ta# shifting is sho n in %igure &-;c, here the demand is perfectly inelastic, since there is no (uantity reaction as the price increases from p to p. The initial (uantity. 4, and the post ta# (uantity. Tax shifting and type of tax: characteristics as (7) hether it is direct or indirect and (=) broad based or narro based, >enerally spea)ing the more direct the ta#, the more difficult shifting becomes. ?ence, direct ta#es such as the personal income ta# are not especially conducive to the rather mar)et transactions that are necessary for the successful for ard shifting of a ta#. 9n contrast, indirect ta#es such as general retail sales and e#cise ta#es are more closely associated ith further mar)et transactions and are thus more conducive to for ard shifting.

9n terms of the e#tent of the ta# base, the more broad based a ta#, the easier it tends to be to shift the ta#. .ppositely, the more narro based the ta#, the more difficult ta# shifting becomes. Tax shifting and political jurisdiction:The geographical nature of the political unit hich levies a ta# also helps to determine its shiftablity. 9n this conte#t, a political unit may be a local, state, national, or even international government. >enerally, the narro er the geographical limits of a political unit, the more difficult it is to shift a ta#. %or e#ample, a ne (or increased) general retail sales ta# in a city may lead to consumption read@ustments.

Revenue classification in Bangladesh

Items non-tax revenue: 7.

6ividend and profit, interest =. 2dministrative fees A charge '. %ines, penalties A forfeiture B. "eceipts for services rendered ;. "ent, leases and recoveries C. Tolls A levies &. Don-commercial sale E. 6efence receipts

F. "ail ay, post office 7G. Capital revenue 77. .ther non- ta# revenue A receipts Items of NBR tax: 7. 8alue 2dded Ta# (82T) =. 9ncome ta# '. Customs duty B. Turnover ta# ;. "egulatory duty C. Supplementary duty &. >ift ta# E. %oreign travel ta# Items of non- NBR tax: 7. Darcotics A li(uor duty =. !otor vehicle ta# '. Land revenue B. Stamp duty (Don-Hudicial)