Shifting of Tax by Companies A Further Comment

A Further Comment I S Gulati IN HIS REPLY to comments by Ved P Gandhi and B V Mehta ("Economic and Political Weekly", June 17, 1967), V D Lall is perfectly justified in rejecting Gandhi's suggestion that the market value and not the book value of share capital should be employed to study the trend is dividend yields and for the right reasons too. I would only add that the ratio of dividends to the market value of paid-up capital, where the latter variable itself is influenced not only by the changes in dividends but also by several other factors not all of which are easily quantifiable in their impact on stock market valuations, is certainly useful in assessing current yields on equity investment but it has no relevance in the study of tax shifting. Would Gandhi regard a rise in the above ratio in conse- quense of a decline in stock market valuations following, say, the renewal of hostilities between India and China, as an indication of the shifting of corporation tax?