IDEAS home Printed from https://ideas.repec.org/b/wbk/wbpubs/15067.html
   My bibliography  Save this book

Tax Expenditures--Shedding Light on Government Spending through the Tax System : Lessons from Developed and Transition Economies

Author

Listed:
  • Hana Polackova Brixi
  • Christian M.A. Valenduc
  • Zhicheng Li Swift

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.

Suggested Citation

  • Hana Polackova Brixi & Christian M.A. Valenduc & Zhicheng Li Swift, 2004. "Tax Expenditures--Shedding Light on Government Spending through the Tax System : Lessons from Developed and Transition Economies," World Bank Publications - Books, The World Bank Group, number 15067.
  • Handle: RePEc:wbk:wbpubs:15067
    as

    Download full text from publisher

    File URL: https://openknowledge.worldbank.org/bitstream/handle/10986/15067/275830PAPER0Tax0expenditures.pdf?sequence=1
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Zee, Howell H. & Stotsky, Janet G. & Ley, Eduardo, 2002. "Tax Incentives for Business Investment: A Primer for Policy Makers in Developing Countries," World Development, Elsevier, vol. 30(9), pages 1497-1516, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Vjekoslav Bratic, 2006. "Tax expenditures: a theoretical review," Financial Theory and Practice, Institute of Public Finance, vol. 30(2), pages 113-127.
    2. Tatiana Malinina, 2010. "Recognition and Measurement of Tax Expenditures: International Experience and Russian Practice," Research Paper Series, Gaidar Institute for Economic Policy, issue 146P.
    3. Viktor V. Ivanov & Nadezhda A. Lvova & Natalia V. Pokrovskaia & Svetlana V. Naumenkova, 2018. "Determinants of tax incentives for investment activity of enterprises," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 4(2), pages 125-141.
    4. repec:esr:chaptr:jacb200505 is not listed on IDEAS
    5. Boss, Alfred & Rosenschon, Astrid, 2006. "Subventionen in Deutschland: Eine Bestandsaufnahme," Kiel Working Papers 1267, Kiel Institute for the World Economy (IfW Kiel).
    6. Renato E. Reside, Jr. & Ruperto Alonzo, . "Non-Investment-Related Tax Incentives (NITIs): A Policy Paper," PCED Policy Notes, Philippine Center for Economic Development.
    7. Vjekoslav Bratic, 2012. "(In)efficiency of corporate income tax expenditures on underdeveloped areas of special tax treatment in Croatia," Financial Theory and Practice, Institute of Public Finance, vol. 36(4), pages 373-394.
    8. World Bank, 2018. "Indonesia Economic Quarterly, March 2018," World Bank Publications - Reports 29616, The World Bank Group.
    9. World Bank Group, 2015. "Moldova Public Expenditure Review," World Bank Publications - Reports 28331, The World Bank Group.
    10. Callan, Tim & Walsh, John R. & Coleman, Kieran, 2005. "Tax Expenditures," Papers BP2006/3, Economic and Social Research Institute (ESRI).
    11. Swift, Zhicheng Li, 2006. "Managing the effects of tax expenditures on the national budget," Policy Research Working Paper Series 3927, The World Bank.
    12. Jozef Pacolet & Joris Vanormelingen, 2015. "Illicit Financial Flows: concepts and first macro estimates for Belgium and its 18 preferred partner countries," BeFinD Working Papers 0110, University of Namur, Department of Economics.
    13. Adam Wyszkowski, 2010. "Koncepcja tax expenditures w systemie podatkowym," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 9, pages 65-82.
    14. Schuknecht, Ludger & Ebert, Werner & Thöne, Michael & Afonso, António, 2005. "Quality of public finances and growth," Working Paper Series 438, European Central Bank.
    15. Yury M. Gorlin & Victor Y. Lyashok, 2018. "Tax Incentives in Russia and Other Countries: Critical Analysis," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 6, pages 34-46, December.
    16. Mr. Thomas Dalsgaard, 2005. "U.S. Tax Reform: An Overview of the Current Debate and Policy Options," IMF Working Papers 2005/138, International Monetary Fund.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alexander Klemm & Stefan Parys, 2012. "Empirical evidence on the effects of tax incentives," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(3), pages 393-423, June.
    2. Sijbren Cnossen, 2013. "Preparing the way for a modern GST in India," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(4), pages 715-723, August.
    3. World Bank, 2005. "Dominica : OECS Fiscal Issues, Policies to Achieve Fiscal Sustainability and Improve Efficiency and Equity of Public Expenditures," World Bank Publications - Reports 8681, The World Bank Group.
    4. Sanz Labrador, Ismael & Sanz-Sanz, José Félix, 2013. "Política fiscal y crecimiento económico: consideraciones microeconómicas y relaciones macroeconómicas," Macroeconomía del Desarrollo 5367, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    5. Abdramane Camara, 2023. "The Effect of Foreign Direct Investment on Tax Revenue," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 65(1), pages 168-190, March.
    6. World Bank, 2005. "Afghanistan - Managing Public Finance for Development : Volume 3, Key Cross-cutting Issues," World Bank Publications - Reports 8391, The World Bank Group.
    7. International Monetary Fund, 2008. "Greece: Selected Issues," IMF Staff Country Reports 2008/147, International Monetary Fund.
    8. Munongo, Simon & Akanbi, Olusegun Ayo & Robinson, Zurika, 2017. "Do tax incentives matter for investment? A literature review," Business and Economic Horizons (BEH), Prague Development Center (PRADEC), vol. 13(2).
    9. Laurent Corthay & Jan Loeprick, 2010. "Taxing Tourism in Developing Countries : Principles for Improving the Investment Climate Through Simple, Fair, and Transparent Taxation," World Bank Publications - Reports 10485, The World Bank Group.
    10. Abdramane Camara, 2019. "The effect of foreign direct investment on tax revenue in developing countries," Working Papers hal-03188025, HAL.
    11. James Alm & Mir Ahmad Khan, 2015. "Assessing and Reforming Enterprise Taxation in Pakistan," Working Papers 1513, Tulane University, Department of Economics.
    12. Mr. Manuk Ghazanchyan & Mr. Alexander D Klemm & Yong Sarah Zhou, 2018. "Tax Incentives in Cambodia," IMF Working Papers 2018/071, International Monetary Fund.
    13. Nguyen-Thanh, David & Strupat, Christoph, 2012. "Is the Burden Too Small? – Effective Tax Rates in Ghana," Ruhr Economic Papers 389, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    14. Chang Woon Nam & Doina Radulescu & Doina Maria Radulescu, 2004. "Types of Tax Concessions for Attracting Foreign Direct Investment in Free Economic Zones," CESifo Working Paper Series 1175, CESifo.
    15. Theodore Kahn & Zack Zimbalist, 2022. "Public investment versus government consumption: how FDI shocks shape the composition of subnational spending in Mexico," Review of International Political Economy, Taylor & Francis Journals, vol. 29(2), pages 502-537, March.
    16. Segundo Camino‐Mogro, 2023. "Tax incentives, private investment and employment: Evidence from an Ecuadorian reform," Journal of International Development, John Wiley & Sons, Ltd., vol. 35(7), pages 2129-2156, October.
    17. repec:col:000093:012622 is not listed on IDEAS
    18. Nathan M. Jensen & Michael G. Findley & Daniel L. Nielson, 2020. "Electoral Institutions and Electoral Cycles in Investment Incentives: A Field Experiment on Over 3,000 U.S. Municipalities," American Journal of Political Science, John Wiley & Sons, vol. 64(4), pages 807-822, October.
    19. Estian Calitz & Eva Muwanga-Zake & Alexius Sithole & Wynnona Steyn, 2021. "Depreciation allowances in South Africa," Studies in Economics and Econometrics, Taylor & Francis Journals, vol. 45(1), pages 1-22, January.
    20. Hisali, Eria, 2012. "Trade policy reform and international trade tax revenue in Uganda," Economic Modelling, Elsevier, vol. 29(6), pages 2144-2154.
    21. repec:idq:ictduk:13711 is not listed on IDEAS
    22. S. Abbas & Alexander Klemm, 2013. "A partial race to the bottom: corporate tax developments in emerging and developing economies," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(4), pages 596-617, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbpubs:15067. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tal Ayalon (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.