The Tax Research glossary seeks to explain the terms used on this blog that refer to more technical aspects of economics, accounting and tax. It recognises that understanding these terms is critical to understanding the economic issues that affect us all the time.

Like the rest of the Tax Research blog, this glossary is written by Richard Murphy unless there is a note to the contrary. It is normative approach and reflects post-Keynesian, heterodox economic opinion with a bias towards modern monetary theory. The fact that many items in that sentence are hyperlinked shows that they are explained in the glossary.

The copyright notices pertaining to the Tax Research blog apply to this glossary.

The glossary is designed to achieve three goals:

  • It seeks to provide a short, hopefully straightforward, definition of what a term might mean.
  • It then seeks, when appropriate, to explain what the term means within the context in which it is used. This is meant to elaborate the definition to add to understanding.
  • It then critiques the term, explaining, if appropriate, what the weaknesses inherent in the term or the situation it describes are. The aim here is to empower the reader to understand the issues behind the nonsense that most professions create around their activity to provide them with a mystique that they rarely deserve and which often hides what they are really up to.

The glossary is not complete. It will grow over time. If you think there are entries that need adding please let me know by emailing Please also feel free to suggest edits. The best way to do this is to copy an entry into Word and then send me a track-changed document indicating the changes that you suggest.

Because of the way in which it is coded this glossary automatically cross refers entries within itself and to the blog that it supports and within the glossary itself but if you think a link is missing please let me know.

Finally, if you like this glossary then you might like to buy me a coffee. It has required the support of a fair few to write it. You can do so here.

Glossary Entries

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z |

GDP per capita

A measure of the gross domestic product  (GDP) of a country attributable to each person living within it.

GDP per capita is calculated by dividing the gross domestic product of a jurisdiction by the number of people in that jurisdiction's population.

This measure can be seriously misleading. For example, gross domestic product includes elements that are rarely attributable to individuals such as corporate profits. In some jurisdictions where these are particularly significant, as is the case in tax haven locations such as Luxembourg and Ireland, GDP per capita measures appears to be particularly high when in reality the local population of the countries in question see little or no benefit arising as a consequence.

The measure also fails to take into account the distribution of income within the jurisdiction and can, therefore, hide gross inequality behind a veneer of respectability.

For a broader discussion of the weaknesses within the measurement of GDP, see the entry on that subject.

Back to top

General anti-avoidance rule

A general anti-avoidance rule (GAAR) for taxation seeks to tackle those who try to break the rules of taxation through the use of further rules.

Rather than considering intention, as a general anti-avoidance principle (GANTIP)  does, a general anti-avoidance rule lays downs ways of interpreting a series of events to determine whether the benefit of tax legisla­tion can be given to the taxpayer.

Rules are invariably open to interpretation, hence a general anti-avoidance rule runs the risk of increasing the opportunity for tax abuse.

Back to top

Generally accepted accounting principles

Generally accepted accounting principles (GAAP) differ from International Accounting Standards Board (IASB) accounting standards and financial reporting standards in that they tend to be set by the financial regulator of each jurisdiction for use by reporting entities preparing accounts within it that are not subject to IASB requirements.

Generally accepted accounting principles can vary widely in their scope and requirements. In some jurisdictions (such as the UK) they are akin to IASB standards in many ways, but this is by no means the universal case. As such there remain widespread differences between the accounting standards in use in many jurisdictions.

This is a particular problem when IASB standards are used to prepare the accounts of a parent company but local GAAP is used to prepare the accounts of its subsidiaries in each location in which it might operate, meaning that there is frequently both incompatibility between those accounts and an opportunity for the companies in question to arbitrage the difference in accounting standards to inflate or suppress the reporting of profits and liabilities, as they wish.

Back to top

Gift tax

Taxes charged on gifts either during life or on death. The charges may be on the donor or on the cumulative value of gifts received by the recipient.

Capital gains tax can be charged on gifts but is not generally considered a gift tax. In the UK inheritance tax is a gift tax.

Back to top


A historic name for UK government bonds which were once issued on gilt edged paper. See bonds for a broader explanation.

Back to top

Gini coefficient

The Gini coefficient is a measure of income inequality within a country.

The Gini coefficient is usually ex-pressed as a percentage or index where either 1 or 100% indicates "perfect" inequality and 0 or 0% indicates "perfect" equality of income distribution.

The compiling of the index requires that costly surveys be undertaken. As a result, neither the IMF nor the World Bank computes Gini coefficients as part of their country missions and programmes.  As a result the Gini coefficient has a rather sparse coverage in terms of countries and years for which it is avail­able.

Scandinavian countries have Gini coefficients of around 25%, continental Euro­pean countries of around 30%, Anglo-Saxon countries of around 40%, many Latin American Countries of around 50-60%, and some African countries reach Gini coeffi­cients of 60-70%.

There are now better indices of inequality available. See, for example, the Palma ratio.

Back to top

Glass-Steagall Act

The Glass-Steagall Act is a law in the USA passed in 1933. It was one of the very early pieces of legislation passed by President Franklin D Roosevelt to help the USA recover from the after effects of the 1929 stock market crash.

The Act required that commercial banks refrain from investment banking activities. The aim was to to protect depositors from the risk of losses that might arise from stock speculation by banks, in which they had deposited funds.

The law was made into a permanent measure in 1945 but was repealed by the Clinton administration in 1999. However, the Federal Deposits Insurance scheme that guaranteed the safety of depositors' funds in US banks survived the repeal.

Back to top


GNP stands for gross national product.

The calculation of GNP is based upon that for GDP (gross domestic product).

If income earned by the residents of a country from their investments abroad is added to GDP and then there is subtracted income paid from the country to investors abroad the result is the country's gross national product.

Back to top

Goodhart's Law

Goodhart's law (named after UK economist Charles Goodhart) states that "When a measure becomes a target, it ceases to be a good measure"

Goodhart said that “Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes”.

Gross domestic product (GDP)  is a particular example of a measure subject to Goodhart's law.

Back to top


Greedflation is the term applied to companies exploiting their market power to increase their prices above the rate required to cover their increased costs during a period of economic uncertainty, which behaviour on their part then fuels the rate of inflation within an economy whilst significantly enriching their shareholders and their senior management.

Back to top


A number of companies or similar organisations that exist under the common control of a single company, organisation or natural person who is then referred to as the group parent entity or, more commonly, company.

Controlled entities are commonly referred to as subsidiary entities if they form part of a commercial group of limited liabilities entities.

By definition a government is a group entity because its activities will be structured through tiers of organisation (ministries or departments; central, state, regional, devolved and local governments; state control trading entities; a central bank; quasi-autonomous non-governmental organisations (Quangos); etc., ) all of which will ultimately be accountable to a central government.

See also subsidiary company.

Back to top

Group accounts

The accounts of a reporting entity reflect the transactions which it undertakes with those people and entities that are external to it. Those accounts do largely reflect the value of transactions as goods, services and money move across the boundary of that reporting entity i.e. accounts record the value of these as they move into or out of its control.

If a reporting entity controls other reporting entities, then it is referred to as a parent entity or group. It does then not only prepare accounts for its own transactions but also prepares what are called consolidated accounts or group accounts for the group as a whole.

Group or consolidated accounts are designed so that all the transactions between group companies are cancelled out and what remain are the sales and purchases, assets and liabilities arising from transactions with third parties external to the group as a whole.

The supposed purpose of group accounts is to show the total resources and trading under the control of the directors of the group parent company for the benefit of its shareholders, who are (as is usual under all  commonplace accounting standards) assumed to be the only stakeholder  with an interest in those accounts or financial statements.

There are substantial problems with this assumption and with the resulting group or consolidated financial statements. Firstly, the accounts are not prepared to provide information to five major stakeholder groups with an interest in them:

  1. Customers and suppliers
  2. Employees
  3. Regulators
  4. Tax authorities
  5. Civil society in all its forms.

They are, as a result, designed to be deficient.

Secondly, the group accounts rarely disclose information on:

  1. Where the group trades with indicators of scale (sales, number of employees, employee cost, profit and net assets invested) by location
  2. Which companies make up the group; only the larger ones often being disclosed
  3. The scale of intra-group trading when it is this intra-group trading that is frequently used to misallocate profits between jurisdictions to achieve a tax saving by abusing arm's length pricing rules established by the OECD (see separate entries for all these issues)
  4. Tax haven activity is rarely if ever disclosed adequately
  5. Tax paid is rarely disclosed by country.

Country-by-country reporting was created to tackle these deficiencies but has yet to receive endorsement by any major accounting standards setter (although Australia is moving in that direction) and despite the fact that it has been required for tax purposes by most major tax authorities since 2015.

There is also a commonplace problem within many group accounts where the parent company often prepares its accounts using local generally accepted accounting principles  whilst the group prepares its accounts using International Financial Reporting Standards. The resulting differences in presentation are frequently used as a basis for arbitrage  so that higher profits are declared in the group parent company accounts than for the group as a whole, allowing higher dividends to be paid than the group can seemingly afford.

Because auditors have been willing to declare the accounts of group companies including all these deficiencies as true and fair their own professional reputation has been declining throughout this century.

Back to top