Tax expenditure and the treatment of tax incentives for investment

Redonda, Agustin / Santiago Diaz de Sarralde / Mark Hallerberg / Lise Johnson / Ariel Melamud / Ricardo Rozemberg / Jakob Schwab / Christian von Haldenwang
Externe Publikationen (2019)

in: Economics: The Open-Access, Open-Assessment E-Journal 13 (12), 1-11

DOI: org/10.5018/economics-ejournal.ja.2019-12
Information

Governments use tax expenditures to boost investment, innovation and employment. However, these schemes are largely opaque, costly and often ineffective in reaching their stated goals. They also frequently trigger unwanted side effects. In order to improve the performance of these tools, the authors present three concrete policy proposals: First, governments should increase transparency on tax benefits. G20 members should take the lead on this with frequent and comprehensive tax expenditure reports. Second, G20 governments should improve the design of tax incentives with the aim of minimizing the generation of windfall profits and negative spillover effects within and across (in particular, on poorer) countries. Third, governments should phase out tax expenditures that are environmentally harmful, including tax incentives for fossil fuels and other schemes that promote an unsustainable use of natural resources.

About the authors

Haldenwang, Christian von

Political Scientist

Haldenwang

Schwab, Jakob

Economist

Schwab

Further experts

Sommer, Christoph

Economist 

Hilbrich, Sören

Economist 

Gudibande, Rohan

Economist 

Schiller, Armin von

Political Scientist 

Volz, Ulrich

Economist 

Berensmann, Kathrin

Economist 

Laudage, Sabine

Economist