Tax Expenditure Management - U.K.

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Tax Expenditure Management

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A tax expenditure is a 'tax break' allowed to a taxpayer or group of taxpayers, for example, by way of concession, deduction, deferral or exemption. The tax expenditure concept, as it was first identified, was designed to demonstrate the similarity between direct government spending on the one hand and spending through the tax system on the other. The identification of benefits provided through the tax system as tax expenditures allows analysts to consider the fiscal significance of those parts of the tax system which do not contribute to the primary purpose of raising revenue. Although a seemingly simple concept, it has generated a range of complex definitional and practical issues, and this book identifies and critically assesses the controversial aspects of tax expenditure and tax expenditure management.

• Proposes the concept of tax expenditure management and emphasises the need for a systematic approach to the identification and appraisal of tax expenditures

• Unifies the disciplines of public finance and political science by offering a realistic approach to tax expenditure management

• Proposes a broader definition of 'tax expenditure' which is not tied to the limited definition of the concept adopted in the US, thereby placing tax expenditure management upon a more consistent footing

Acknowledgements	viii
1 Introduction	1
1.1 The subject of this book	1
1.2 What are tax expenditures?	1
1.3 Why single out tax expenditures?	3
1.4 Explaining the focus upon tax expenditures – the significance of tax expenditures	4
1.5 What else is controversial about tax expenditures?	8
1.6 The irresolvable nature of these tax expenditure controversies	10
1.7 Tax expenditure controversies and liberal-democratic political theory	11
1.8 The thesis of the book	13
1.9 Outline of the book	14
2 The tax expenditures concept	15
2.1 Introduction	15
2.2 The concept of tax expenditures	17
2.3 The purpose of categorisation	23
2.4 The function of identifying tax expenditures	28
2.5 The identification of tax expenditures	35
2.6 The measurement of tax expenditures	55
2.7 Contemporary expansions of the traditional concept of tax expenditures	59
2.8 Conclusion	63
3 Reporting on tax expenditures	65
3.1 Introduction	65
3.2 International aspects of tax expenditures	68
3.3 The impact on reporting of the purpose and function of recognising tax expenditures	76
3.4 Tax expenditures so defined	81
3.5 The benchmark tax law	83
3.6 Identification of all types of tax expenditures	91
3.7 Measurement of tax expenditures	93
3.8 Structure and information contained in tax expenditures reports	97
3.9 Conclusion	101
4 The practical significance of tax expenditures	103
4.1 Introduction	103
4.2 Where to start? Holism, atomism and tax expenditure management	104
4.3 The economic significance of tax expenditures	107
4.4 Public administration	128
4.5 Legal significance	130
4.6 Administration of taxation law	134
4.7 The legitimacy of government	144
4.8 Tax expenditures – the weak link in the fiscal chain?	145
5 The politics of tax expenditure management	147
5.1 Introduction	147
5.2 The connection between moral objectivity and the politics of tax expenditure management	149
5.3 Deontological norms and their relevance to tax expenditure management	154
5.4 Democracy as political procedure – accountability and transparency	169
5.5 Ontological accounts of tax expenditure management	182
5.6 Deliberative concepts of accountability	191
6 Managing tax expenditure controversies	203
6.1 Introduction – epistemic and political tensions	203
6.2 What is to be done?	208
6.3 Towards a democratic tax expenditure management framework	217
6.4 Into the political future	230
Bibliography	232
Index	249