Publication: Tax Expenditures--Shedding Light on Government Spending through the Tax System : Lessons from Developed and Transition Economies
Date
2004
ISSN
Published
2004
Author(s)
Abstract
Recently developing countries have
focused attention on the usefulness of tax
expenditures' in shaping prudent and transparent fiscal
policy. In adopting a market economy, developing countries
commonly use tax expenditures as major fiscal policy
instruments. However, with limited theoretical understanding
of, and ad hoc experience with, applying tax expenditures,
developing countries now confront not only revenue losses
higher than they had anticipated but also the erosion of
their tax bases in systems that generally have been in
existence fewer than 10 years. Fortunately, the experience
and practice of developed countries offer insights into
understanding and applying tax expenditures. Most developed
countries have established tax reporting systems, which
provide empirical information on their tax expenditures.
Such tax reporting systems tend to be part of a
country's overall fiscal system for strengthening
government finance and contribute significantly to fiscal
transparency. Using the information available, several
governments attempt to analyze the cost and economic effects
of individual tax expenditures. Some governments even bring
tax expenditures into the budgetary process and subject them
to a level of scrutiny similar to that for direct
expenditures. This book contains several papers on how both
developed and transition economies define and apply tax
expenditure systems. The developed countries-Australia,
Belgium, Canada, the Netherlands, and the United States-have
established tax expenditure accounting and, in varying
degress, brought tax expenditures into budgetary process.
The experience of China and Poland shed light on why it is
important for developing and transition economies to ensure
fiscal transparency and to perform systematic fiscal
analysis when implementing tax expenditures, as well as how
to address these issues in relatively new tax systems.
Link to Data Set
Citation
“Polackova Brixi, Hana; Valenduc, Christian M.A.; Swift, Zhicheng Li. 2004. Tax Expenditures--Shedding Light on Government Spending through the Tax System : Lessons from Developed and Transition Economies. © Washington, DC: World Bank. http://hdl.handle.net/10986/15067 License: CC BY 3.0 IGO.”
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