Tax expenditures: The hidden side of government spending by Agustin Redonda, Christian von Haldenwang published by VOXEU (6/2021)
Tax expenditures – such as tax incentives for firms, tax deductions for households, and lower tax rates for specific goods and services – are both widespread and costly, but are generally not subject to the same level of scrutiny in the budget process as direct spending. This column introduces the Global Tax Expenditures Database, which aims to improve reporting and enhance scrutiny. As governments worldwide face growing funding needs to respond to the pandemic, they cannot afford to lose revenues to ill-designed tax breaks. Comprehensively assessing tax expenditures is crucial, and estimating and reporting their fiscal cost is a vital first step.
