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How to Evaluate Tax Expenditures
Author:
Sebastian Beer https://isni.org/isni/0000000404811396 International Monetary Fund

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Ms. Dora Benedek
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Brian Erard https://isni.org/isni/0000000404811396 International Monetary Fund

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Jan Loeprick https://isni.org/isni/0000000404811396 International Monetary Fund

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Series:
IMF How To Notes
Volume/Issue:
Volume 2022: Issue 005
Language:
English
Publication Date:
30 Nov 2022
DOI:
https://doi.org/10.5089/9798400221507.061
ISBN:
9798400221507
ISSN:
2522-7912
Pages:
19
Keywords:
tax expenditures; cost-benefit assessment; public policy evaluation; sample evaluation; publication order; publication service; title page; post evaluation; Tax incentives; Compliance costs; Value-added tax; Global; East Asia
Legal-disclaimer:
Fiscal Affairs Department (FAD) How to Notes offer practical advice from IMF staff members to policymakers on important fiscal issues. The views expressed in FAD How to Notes are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Governments use tax expenditures (TEs) to provide financial support or benefits to taxpayers. The budgetary impact of TEs can be similar to that of direct outlays: after the support is provided, less money is available to fund other government priorities. Systematic evaluations are needed to guide informed decision-mak¬ing and to avoid a situation where the narrative on the benefits of TEs is primarily driven by profiting stakeholders. By TE “evaluation,” this note refers to a process that seeks to systematically inform policymak¬ers on the desirability of introducing or maintaining specific tax benefits by gathering and analyzing avail¬able quantitative and qualitative information on their effects. Evaluation processes can be tailored to different levels of data availability and analytical capacity. An evaluation should focus on the policy objective of a TE and whether it effectively and efficiently contrib¬utes to that policy objective. Although important lessons can be learned from coun¬try practices in implementing increasingly ambitious evaluation processes, there is no single best-practice approach to replicate.
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Cover IMF How To Notes
IMF How To Notes
ISSN:
2522-7912
Publisher:
International Monetary Fund