Tax Expenditures in OECD Countries

Tax Expenditures in OECD Countries

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Livres
242 pages

Description

In all OECD countries, governments collect revenues through taxes and redistribute this public money, often by obligatory spending on social programmes such as education or health care. Their tax systems usually include “tax expenditures” – provisions that allow certain groups of people, such as small businessmen, retired people or working mothers, or those who have undertaken certain activities, such as charitable donations, to pay less in taxes.

The use of tax expenditures by governments is pervasive and growing. At a time when many government budgets are threatened by population ageing and adverse cyclical developments, there is a pressing need to avoid inefficient government programmes, some of which may utilise tax expenditures.

This book sheds light on the use of tax expenditures, mainly through a study of ten OECD countries: Canada, France, Germany, Japan, Korea, Netherlands, Spain, Sweden, the United Kingdom and the United States. This book will help government officials and the public better understand some of the technical and policy issues behind the use of tax expenditures. It highlights key trends and successful practices, and addresses a broad range of government finance issues, including tax policy making, tax and budget efficiency, fiscal responsibility and rule making.


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Publié par
Date de parution 05 janvier 2010
Nombre de visites sur la page 9
EAN13 9789264076907
Licence : Tous droits réservés
Langue English

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O RG ANI SATI O N FO R ECO NO M I C CO -O PERATI O N AND DEVELO PM ENT
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The OECD member countries are: Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece , Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Spain, Swede n, Switzerland, Turkey, the United Kingdom and the United States. The Commission of th e European Communities takes part in the work of the OECD.
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Also available in French:Les dépenses fiscales dans les pays de l’OCDE
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For ew or d
In all OECD member countries, governments collect revenues through taxes and redistribute this public money, often by obligatory spending on social programmes such as education or health care. Their tax systems usua lly include “tax expenditures” – provisions that allow certain groups of people, suc h as small businessmen, retired people or working mothers, or those who have undertaken certain activities, such as charitable donations, to pay less in taxes.
The use of tax expenditures by governments is perva sive and growing. At a time when many government budgets are threatened by popu lation ageing and adverse cyclical developments, there is a pressing need to avoid inefficient government programmes, some of which may utilise tax expenditu res.
This book sheds light on the use of tax expenditure s, mainly through a study of ten OECD countries: Canada, France, Germany, Japan, Korea, the Netherlands, Spain, Sweden, the United Kingdom and the United States. T his book will help government officials and the public better understand some of the technical and policy issues behind the use of tax expenditures. It highlights k ey trends and successful practices, and addresses a broad range of government finance i ssues, including tax policy making, tax and budget efficiency, fiscal responsib ility and rule making.
The book is the result of a project led by the Budg eting and Public Expenditures Division (BUD) of the OECD Public Governance and Te rritorial Development Directorate (GOV), under the auspices of the OECD Working Party of Senior Budget Officials. The project was coordinated by Barry Anderson, Head of Division (GOV/BUD). The author of the report is Joseph J. Minarik, a consultant to th e OECD who works for the Committee for Economic Development, an NGO located in Washing ton DC. Stephen Matthews and Jens Lundsgaard of the OECD Centre for Tax Policy a nd Administration (CTP) and Chris Heady, formerly of CTP, provided valuable inp ut for the report.
The book has benefited from meetings and seminars o rganised in 2008 and 2009 by both the Working Party of Senior Budget Officials a nd Working Party No. 2 on Tax Policy Analysis and Tax Statistics. It includes res ults from a questionnaire that was sent to a selection of OECD member countries. The a uthor is grateful for the participation and discussion at meetings and for th e responses to the questionnaire. Any misinterpretations from these sources of inform ation are the responsibility of the author.
The OECD Working Party of Senior Budget Officials a ims to improve the effectiveness and efficiency of resource allocation and management in the public sector. Every year the Working Party organises a nu mber of meetings on topics of interest to budget officials. Some are organised on a regular basis – for example, the meetings of the network on financial management (ac crual accounting) and the network on performance and results. In addition to those me etings, other topics are discussed on anad hocbasis, as requested by the Working Party. Such is the case for this project on tax expenditures.
Taent sof Cont bl e
Title Page ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT Copyright Page Foreword This book has... Part I - A look at tax expenditures Chapter 1 - Introduction Chapter 2 - Policy background and practices Chapter 3 - The role of tax expenditures in the bud get process Chapter 4 - Country profiles: Methods, institutions and data Chapter 5 - Conclusions
Part II - Comparing tax expenditures in OECD countries Explanatory key
Data sources
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PaIr t
A lo o k a t t a x e x p e n d it u re s
Chapt er 1
In t ro d u c t io n
Thischapter gives a brief introduction and history of tax expenditures. It begins by attempting to define tax expenditures the n proceeds to discuss the different types of tax expenditures. There is a short discussion on the different ways to measure them. It then gives several concrete examples of tax expenditures in different countries. It conc ludes by discussing some of the controversy concerning tax expenditures.
W hat are tax expenditures? Tax expenditures are “provisions of tax law, regulation or practices that reduce or postpone revenue for a comparatively narrow population of taxpayers relative to a benchmark tax” (Anderson, 2008). For government, a tax expenditure is a loss in revenue; for a taxpayer, it is a reduction in tax liability. Tax expenditures are better known in many OECD countries as tax reliefs, tax su bsidies and tax aids (Schick, 2007).
In practice, defining tax expenditures is difficult because “some tax measures may not be readily classified as part of the benchmark or an exception to it” (Whitehouse, 1999). The problem begins with defining the “basic tax structure”. Most experts would agree that structural elements of a tax system shou ld not be recorded as tax expenditures, while “programmatic” features should be.
According to Kraan (2004), the “benchmark tax inclu des: the rate structure, accounting conventions, the deductibility of compul sory payments, provisions to facilitate administration, and provisions relating to international fiscal obligations”.
Since tax expenditures are not actual outlays, the amounts “spent” are notional; that is, they are based on assumptions and estimates as to how taxpayers would behave under particular conditions.
W hat are the different types of tax expenditures? Tax expenditures may take a number of different forms: allowances: amounts deducted from the benchmark to arrive at the tax base; exemptions: amounts excluded from the tax base; rate reliefyer or taxable: a reduced rate of tax applied to a class of taxpa transactions; tax deferral: a delay in paying tax; credits: amounts deducted from tax liability (Anderson, 20 08).
Box 1.1. Examples of tax expenditures