Why Worry About Tax Expenditure?

Tax expenditures are concessions that fall outside tax norms or benchmarks. These norms include accounting conventions, the structure of tax rates, the deductibility of compulsory payments, provisions to facilitate tax administration, and norms rel...

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Main Authors:	Swift, Zhicheng Li, Cavalcanti, Carlos B.
Format:	Brief
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ACCOUNTING BUDGET PROCESS DEDUCTIONS ECONOMIC DEVELOPMENT ECONOMICS EFFECTIVE TAX RATES ENTITLEMENTS EXPENDITURES FEDERAL GOVERNMENT FISCAL FISCAL TRANSPARENCY GOVERNMENT BUDGETS GOVERNMENT EXPENDITURES GOVERNMENT SPENDING INCOME INCOME TAX MINISTERS MINISTRY OF FINANCE POLICY RESEARCH PRESIDENCY PRIVATE SECTOR PRIVATE SECTOR PARTICIPATION PRODUCERS PROVISIONS PUBLIC EXPENDITURE SOCIAL DEVELOPMENT SOCIAL PROGRAMS TAX TAX ADMINISTRATION TAX BASE TAX BENEFITS TAX BRACKETS TAX DEDUCTION TAX EXPENDITURE TAX EXPENDITURES TAX LAWS TAX LIABILITIES TAX PAYMENTS TAX RATE TAX RATES TAX REGIME TAX RETURNS TAX REVENUE TAX REVENUES TAX SYSTEM TAXABLE INCOME TAXATION TAXPAYERS TAX EXPENDITURES BENCHMARKS FISCAL POLICIES POLICYMAKERS TAX EXEMPTIONS ALLOWANCES CREDITS DEFERRALS CHARITABLE CONTRIBUTIONS UNSKILLED WORKERS
Online Access:	http://documents.worldbank.org/curated/en/2003/01/2518855/worry-tax-expenditure http://hdl.handle.net/10986/11327

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spelling	okr-10986-113272021-04-23T14:02:55Z Why Worry About Tax Expenditure? Swift, Zhicheng Li Cavalcanti, Carlos B. ACCOUNTING BUDGET PROCESS DEDUCTIONS ECONOMIC DEVELOPMENT ECONOMICS EFFECTIVE TAX RATES ENTITLEMENTS EXPENDITURES FEDERAL GOVERNMENT FISCAL FISCAL TRANSPARENCY GOVERNMENT BUDGETS GOVERNMENT EXPENDITURES GOVERNMENT SPENDING INCOME INCOME TAX MINISTERS MINISTRY OF FINANCE POLICY RESEARCH PRESIDENCY PRIVATE SECTOR PRIVATE SECTOR PARTICIPATION PRODUCERS PROVISIONS PUBLIC EXPENDITURE SOCIAL DEVELOPMENT SOCIAL PROGRAMS TAX TAX ADMINISTRATION TAX BASE TAX BENEFITS TAX BRACKETS TAX DEDUCTION TAX EXPENDITURE TAX EXPENDITURES TAX LAWS TAX LIABILITIES TAX PAYMENTS TAX RATE TAX RATES TAX REGIME TAX RETURNS TAX REVENUE TAX REVENUES TAX SYSTEM TAXABLE INCOME TAXATION TAXPAYERS TAX EXPENDITURES BENCHMARKS TAX ADMINISTRATION FISCAL POLICIES POLICYMAKERS TAX EXEMPTIONS ALLOWANCES CREDITS DEFERRALS TAX DEDUCTION CHARITABLE CONTRIBUTIONS UNSKILLED WORKERS GOVERNMENT BUDGETS Tax expenditures are concessions that fall outside tax norms or benchmarks. These norms include accounting conventions, the structure of tax rates, the deductibility of compulsory payments, provisions to facilitate tax administration, and norms related to international fiscal obligations. Tax expenditures are deviations from these norms, implemented to encourage behavior deemed desirable by policymakers, and can take a number of forms-including tax exemptions, allowances, credits, deferrals, and relief (see OECD 1996). The classic example is a tax deduction for charitable contributions, where the reduction in tax revenue is more than offset by the increase in support for charitable activities. Tax expenditures are not a free lunch, however. They can lead to inefficiencies and inequities, stimulating no additional activity and making the tax regime more regressive. For instance, a tax concession granted to employers who hire unskilled workers might go to employers who would have hired such workers anyway. Tax expenditures also affect government budgets, because they imply forgoing revenue that could be used to fund direct government expenditures. 2012-08-13T14:46:08Z 2012-08-13T14:46:08Z 2003-01 http://documents.worldbank.org/curated/en/2003/01/2518855/worry-tax-expenditure http://hdl.handle.net/10986/11327 English PREM Notes; No. 77 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Brief Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ACCOUNTING BUDGET PROCESS DEDUCTIONS ECONOMIC DEVELOPMENT ECONOMICS EFFECTIVE TAX RATES ENTITLEMENTS EXPENDITURES FEDERAL GOVERNMENT FISCAL FISCAL TRANSPARENCY GOVERNMENT BUDGETS GOVERNMENT EXPENDITURES GOVERNMENT SPENDING INCOME INCOME TAX MINISTERS MINISTRY OF FINANCE POLICY RESEARCH PRESIDENCY PRIVATE SECTOR PRIVATE SECTOR PARTICIPATION PRODUCERS PROVISIONS PUBLIC EXPENDITURE SOCIAL DEVELOPMENT SOCIAL PROGRAMS TAX TAX ADMINISTRATION TAX BASE TAX BENEFITS TAX BRACKETS TAX DEDUCTION TAX EXPENDITURE TAX EXPENDITURES TAX LAWS TAX LIABILITIES TAX PAYMENTS TAX RATE TAX RATES TAX REGIME TAX RETURNS TAX REVENUE TAX REVENUES TAX SYSTEM TAXABLE INCOME TAXATION TAXPAYERS TAX EXPENDITURES BENCHMARKS TAX ADMINISTRATION FISCAL POLICIES POLICYMAKERS TAX EXEMPTIONS ALLOWANCES CREDITS DEFERRALS TAX DEDUCTION CHARITABLE CONTRIBUTIONS UNSKILLED WORKERS GOVERNMENT BUDGETS
spellingShingle	ACCOUNTING BUDGET PROCESS DEDUCTIONS ECONOMIC DEVELOPMENT ECONOMICS EFFECTIVE TAX RATES ENTITLEMENTS EXPENDITURES FEDERAL GOVERNMENT FISCAL FISCAL TRANSPARENCY GOVERNMENT BUDGETS GOVERNMENT EXPENDITURES GOVERNMENT SPENDING INCOME INCOME TAX MINISTERS MINISTRY OF FINANCE POLICY RESEARCH PRESIDENCY PRIVATE SECTOR PRIVATE SECTOR PARTICIPATION PRODUCERS PROVISIONS PUBLIC EXPENDITURE SOCIAL DEVELOPMENT SOCIAL PROGRAMS TAX TAX ADMINISTRATION TAX BASE TAX BENEFITS TAX BRACKETS TAX DEDUCTION TAX EXPENDITURE TAX EXPENDITURES TAX LAWS TAX LIABILITIES TAX PAYMENTS TAX RATE TAX RATES TAX REGIME TAX RETURNS TAX REVENUE TAX REVENUES TAX SYSTEM TAXABLE INCOME TAXATION TAXPAYERS TAX EXPENDITURES BENCHMARKS TAX ADMINISTRATION FISCAL POLICIES POLICYMAKERS TAX EXEMPTIONS ALLOWANCES CREDITS DEFERRALS TAX DEDUCTION CHARITABLE CONTRIBUTIONS UNSKILLED WORKERS GOVERNMENT BUDGETS Swift, Zhicheng Li Cavalcanti, Carlos B. Why Worry About Tax Expenditure?
relation	PREM Notes; No. 77
description	Tax expenditures are concessions that fall outside tax norms or benchmarks. These norms include accounting conventions, the structure of tax rates, the deductibility of compulsory payments, provisions to facilitate tax administration, and norms related to international fiscal obligations. Tax expenditures are deviations from these norms, implemented to encourage behavior deemed desirable by policymakers, and can take a number of forms-including tax exemptions, allowances, credits, deferrals, and relief (see OECD 1996). The classic example is a tax deduction for charitable contributions, where the reduction in tax revenue is more than offset by the increase in support for charitable activities. Tax expenditures are not a free lunch, however. They can lead to inefficiencies and inequities, stimulating no additional activity and making the tax regime more regressive. For instance, a tax concession granted to employers who hire unskilled workers might go to employers who would have hired such workers anyway. Tax expenditures also affect government budgets, because they imply forgoing revenue that could be used to fund direct government expenditures.
format	Publications & Research :: Brief
author	Swift, Zhicheng Li Cavalcanti, Carlos B.
author_facet	Swift, Zhicheng Li Cavalcanti, Carlos B.
author_sort	Swift, Zhicheng Li
title	Why Worry About Tax Expenditure?
title_short	Why Worry About Tax Expenditure?
title_full	Why Worry About Tax Expenditure?
title_fullStr	Why Worry About Tax Expenditure?
title_full_unstemmed	Why Worry About Tax Expenditure?
title_sort	why worry about tax expenditure?
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2003/01/2518855/worry-tax-expenditure http://hdl.handle.net/10986/11327
_version_	1764416339001212928

Why Worry About Tax Expenditure?

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