Effect of changing taxation and depreciation policies on the leasing industry

Abstract

In the recent years the government's policy of reducing the corporate tax rate and increasing the depreciation rate has been welcomed by the industrial sector. The changes so obviously benefit the sector that it appears incredible that there could be an industry which may not benefit from the changes. In this paper we present an analysis which shows that these changes reduce the spread available to the lessors and the leasees to strike a lease deal which is beneficial to both the parties. This would necessarily reduce the margins available to the leassors and affect the viability of the leasing industry in the long run.