Managing the Effects of Tax Expenditures on National Budgets
Tax expenditures, in the form of tax provisions, are government expenditures. They are conceptually and functionally distinct from those tax provisions whose purpose is to raise revenue. Tax expenditure programs are comparable to entitlement programs. Therefore, tax expenditures must be analyzed in...
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| Format: | Policy Research Working Paper |
| Language: | English |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2006/05/6807139/managing-effects-tax-expenditures-national-budget-managing-effects-tax-expenditures-national-budgets http://hdl.handle.net/10986/8449 |
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okr-10986-8449 |
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oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
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Digital Repositories |
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World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
ACCOUNTING BENCHMARK BENCHMARKS BUDGET BALANCE BUDGET DEFICIT BUDGET PROCESS BUDGETARY CONTROL CORPORATE INCOME TAX DEFICITS DEPOSIT ACCOUNTS DIRECT EXPENDITURE DIRECT EXPENDITURES ECONOMIC GROWTH EXPENDITURE MANAGEMENT EXPENDITURE POLICY EXPENDITURE PROGRAMS FEDERAL BUDGET FINANCIAL TRANSACTIONS FISCAL ACCOUNTABILITY FISCAL ACTIVITIES FISCAL BALANCE FISCAL COSTS FISCAL DEFICIT FISCAL POLICY FISCAL RESOURCES FISCAL SUSTAINABILITY FISCAL SYSTEM FISCAL TRANSPARENCY GDP GOVERNMENT EXPENDITURES GOVERNMENT SPENDING HOUSING INCOME INCOMES INFLATION LOCAL GOVERNMENTS MEDIUM-TERM EXPENDITURE FRAMEWORKS MIDDLE INCOME COUNTRIES NATIONAL BUDGETS PERSONAL INCOME TAX PROPERTY TAX PROVISIONS PUBLIC PUBLIC DEBT PUBLIC EXPENDITURE PUBLIC FUNDS PUBLIC PROCUREMENT PUBLIC RESOURCES PUBLIC SECTOR REGULATORY FRAMEWORK RESOURCE ALLOCATION RETAIL SALES TAX ROADS SOCIAL WELFARE TAX TAX ADMINISTRATION TAX BASE TAX BRACKET TAX CODE TAX CREDIT TAX EXEMPTION TAX EXEMPTIONS TAX EXPENDITURE PROGRAMS TAX EXPENDITURES TAX INCENTIVES TAX LAW TAX LAWS TAX LIABILITIES TAX LIABILITY TAX POLICY TAX RATE TAX RATES TAX REFORM TAX REVENUE TAX REVENUES TAX SIMPLIFICATION TAX STRUCTURE TAX STRUCTURES TAX SUBSIDIES TAX SYSTEM TAXPAYER TAXPAYERS TRANSFER PRICING TRANSITION ECONOMIES TREASURY WEALTH |
| spellingShingle |
ACCOUNTING BENCHMARK BENCHMARKS BUDGET BALANCE BUDGET DEFICIT BUDGET PROCESS BUDGETARY CONTROL CORPORATE INCOME TAX DEFICITS DEPOSIT ACCOUNTS DIRECT EXPENDITURE DIRECT EXPENDITURES ECONOMIC GROWTH EXPENDITURE MANAGEMENT EXPENDITURE POLICY EXPENDITURE PROGRAMS FEDERAL BUDGET FINANCIAL TRANSACTIONS FISCAL ACCOUNTABILITY FISCAL ACTIVITIES FISCAL BALANCE FISCAL COSTS FISCAL DEFICIT FISCAL POLICY FISCAL RESOURCES FISCAL SUSTAINABILITY FISCAL SYSTEM FISCAL TRANSPARENCY GDP GOVERNMENT EXPENDITURES GOVERNMENT SPENDING HOUSING INCOME INCOMES INFLATION LOCAL GOVERNMENTS MEDIUM-TERM EXPENDITURE FRAMEWORKS MIDDLE INCOME COUNTRIES NATIONAL BUDGETS PERSONAL INCOME TAX PROPERTY TAX PROVISIONS PUBLIC PUBLIC DEBT PUBLIC EXPENDITURE PUBLIC FUNDS PUBLIC PROCUREMENT PUBLIC RESOURCES PUBLIC SECTOR REGULATORY FRAMEWORK RESOURCE ALLOCATION RETAIL SALES TAX ROADS SOCIAL WELFARE TAX TAX ADMINISTRATION TAX BASE TAX BRACKET TAX CODE TAX CREDIT TAX EXEMPTION TAX EXEMPTIONS TAX EXPENDITURE PROGRAMS TAX EXPENDITURES TAX INCENTIVES TAX LAW TAX LAWS TAX LIABILITIES TAX LIABILITY TAX POLICY TAX RATE TAX RATES TAX REFORM TAX REVENUE TAX REVENUES TAX SIMPLIFICATION TAX STRUCTURE TAX STRUCTURES TAX SUBSIDIES TAX SYSTEM TAXPAYER TAXPAYERS TRANSFER PRICING TRANSITION ECONOMIES TREASURY WEALTH Swift, Zhicheng Li Managing the Effects of Tax Expenditures on National Budgets |
| relation |
Policy Research Working Paper; No. 3927 |
| description |
Tax expenditures, in the form of tax provisions, are government expenditures. They are conceptually and functionally distinct from those tax provisions whose purpose is to raise revenue. Tax expenditure programs are comparable to entitlement programs. Therefore, tax expenditures must be analyzed in spending terms and integrated into the budgetary process to ensure fiscal accountability. In addition, tax expenditures must be audited for performance and the information must be published (with comprehensive analysis) to ensure fiscal transparency. The author analyzes the concept and definition, size, and effects of tax expenditures, as well as the fiscal accountability and transparency of tax expenditure spending. In short, tax expenditures affect (1) the budget balance, (2) budget prioritization in allocation, (3) the effectiveness and efficiency of fiscal resources, and (4) the scope for abuse by taxpayers, government officials and legislators. While reviewing the current practices in tax expenditures against the requirements of fiscal accountability and transparency, she finds that this fiscal area must be strengthened. The author sketches four building blocks to strengthen tax expenditures toward fiscal accountability and transparency, based on the literature developed by Surry and McDaniel, the practices from industrial and developing countries, the Campos and Pradhan fiscal accountability model, and the International Monetary Fund's fiscal transparency code. The author argues that normative/benchmark tax structure, a revenue-raising component of the tax system, should be formalized. The normative/benchmark tax structure should be legally defined in the tax law and should be transparent. The tax receipts from this normative/benchmark tax structure should be quantified and published. Presently, many countries could publish imputed tax revenue from normative/benchmark tax structures because such data is available. Only if imputed tax revenue is published in the same way as the other budget components-tax revenue received, tax expenditures, direct expenditures, and fiscal balance-will a budget system be truly transparent in terms of revenue-raising activities and expenditure activities. In addition, when the tax revenue-raising activity is formalized, the inherent spending nature of tax expenditures is further exposed. Therefore, tax expenditures should be added to direct expenditures forming total government expenditures. Furthermore, the conventional concept of the size of government should be remedied by including both direct expenditures and tax expenditures. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Swift, Zhicheng Li |
| author_facet |
Swift, Zhicheng Li |
| author_sort |
Swift, Zhicheng Li |
| title |
Managing the Effects of Tax Expenditures on National Budgets |
| title_short |
Managing the Effects of Tax Expenditures on National Budgets |
| title_full |
Managing the Effects of Tax Expenditures on National Budgets |
| title_fullStr |
Managing the Effects of Tax Expenditures on National Budgets |
| title_full_unstemmed |
Managing the Effects of Tax Expenditures on National Budgets |
| title_sort |
managing the effects of tax expenditures on national budgets |
| publisher |
World Bank, Washington, DC |
| publishDate |
2012 |
| url |
http://documents.worldbank.org/curated/en/2006/05/6807139/managing-effects-tax-expenditures-national-budget-managing-effects-tax-expenditures-national-budgets http://hdl.handle.net/10986/8449 |
| _version_ |
1764406038344237056 |
| spelling |
okr-10986-84492021-04-23T14:02:40Z Managing the Effects of Tax Expenditures on National Budgets Swift, Zhicheng Li ACCOUNTING BENCHMARK BENCHMARKS BUDGET BALANCE BUDGET DEFICIT BUDGET PROCESS BUDGETARY CONTROL CORPORATE INCOME TAX DEFICITS DEPOSIT ACCOUNTS DIRECT EXPENDITURE DIRECT EXPENDITURES ECONOMIC GROWTH EXPENDITURE MANAGEMENT EXPENDITURE POLICY EXPENDITURE PROGRAMS FEDERAL BUDGET FINANCIAL TRANSACTIONS FISCAL ACCOUNTABILITY FISCAL ACTIVITIES FISCAL BALANCE FISCAL COSTS FISCAL DEFICIT FISCAL POLICY FISCAL RESOURCES FISCAL SUSTAINABILITY FISCAL SYSTEM FISCAL TRANSPARENCY GDP GOVERNMENT EXPENDITURES GOVERNMENT SPENDING HOUSING INCOME INCOMES INFLATION LOCAL GOVERNMENTS MEDIUM-TERM EXPENDITURE FRAMEWORKS MIDDLE INCOME COUNTRIES NATIONAL BUDGETS PERSONAL INCOME TAX PROPERTY TAX PROVISIONS PUBLIC PUBLIC DEBT PUBLIC EXPENDITURE PUBLIC FUNDS PUBLIC PROCUREMENT PUBLIC RESOURCES PUBLIC SECTOR REGULATORY FRAMEWORK RESOURCE ALLOCATION RETAIL SALES TAX ROADS SOCIAL WELFARE TAX TAX ADMINISTRATION TAX BASE TAX BRACKET TAX CODE TAX CREDIT TAX EXEMPTION TAX EXEMPTIONS TAX EXPENDITURE PROGRAMS TAX EXPENDITURES TAX INCENTIVES TAX LAW TAX LAWS TAX LIABILITIES TAX LIABILITY TAX POLICY TAX RATE TAX RATES TAX REFORM TAX REVENUE TAX REVENUES TAX SIMPLIFICATION TAX STRUCTURE TAX STRUCTURES TAX SUBSIDIES TAX SYSTEM TAXPAYER TAXPAYERS TRANSFER PRICING TRANSITION ECONOMIES TREASURY WEALTH Tax expenditures, in the form of tax provisions, are government expenditures. They are conceptually and functionally distinct from those tax provisions whose purpose is to raise revenue. Tax expenditure programs are comparable to entitlement programs. Therefore, tax expenditures must be analyzed in spending terms and integrated into the budgetary process to ensure fiscal accountability. In addition, tax expenditures must be audited for performance and the information must be published (with comprehensive analysis) to ensure fiscal transparency. The author analyzes the concept and definition, size, and effects of tax expenditures, as well as the fiscal accountability and transparency of tax expenditure spending. In short, tax expenditures affect (1) the budget balance, (2) budget prioritization in allocation, (3) the effectiveness and efficiency of fiscal resources, and (4) the scope for abuse by taxpayers, government officials and legislators. While reviewing the current practices in tax expenditures against the requirements of fiscal accountability and transparency, she finds that this fiscal area must be strengthened. The author sketches four building blocks to strengthen tax expenditures toward fiscal accountability and transparency, based on the literature developed by Surry and McDaniel, the practices from industrial and developing countries, the Campos and Pradhan fiscal accountability model, and the International Monetary Fund's fiscal transparency code. The author argues that normative/benchmark tax structure, a revenue-raising component of the tax system, should be formalized. The normative/benchmark tax structure should be legally defined in the tax law and should be transparent. The tax receipts from this normative/benchmark tax structure should be quantified and published. Presently, many countries could publish imputed tax revenue from normative/benchmark tax structures because such data is available. Only if imputed tax revenue is published in the same way as the other budget components-tax revenue received, tax expenditures, direct expenditures, and fiscal balance-will a budget system be truly transparent in terms of revenue-raising activities and expenditure activities. In addition, when the tax revenue-raising activity is formalized, the inherent spending nature of tax expenditures is further exposed. Therefore, tax expenditures should be added to direct expenditures forming total government expenditures. Furthermore, the conventional concept of the size of government should be remedied by including both direct expenditures and tax expenditures. 2012-06-19T18:22:53Z 2012-06-19T18:22:53Z 2006-05 http://documents.worldbank.org/curated/en/2006/05/6807139/managing-effects-tax-expenditures-national-budget-managing-effects-tax-expenditures-national-budgets http://hdl.handle.net/10986/8449 English Policy Research Working Paper; No. 3927 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |