Assessing Tax Expenditure Reporting in G20 and OECD Economies

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Governments worldwide pursue public policy objectives through direct spending and tax expenditures (TEs). Interestingly though, and despite their significant impact on government budgets, TEs are opaque and very often not subject to the same level of scrutiny in the budget process as direct spending. This paper compares TE reporting across developed countries by assessing the official TE reports of the 43 G20 and OECD economies, based on nine key dimensions that reflect good practice in TE reporting. Based on the assessment of TE reports, we pool countries into three groups: i) 8 countries that have not reported on TEs in the last ten years, ii) 26 countries that have published a basic report (e.g. by providing estimates for a reduced subset of TEs or estimates based on aggregate figures only) in the last ten years, and iii) 9 countries with a detailed and comprehensive TE report that is being published on a regular basis. Overall, there is significant room to improve TE reporting in all countries. This said, as the heterogeneity among reports is significant, specific recommendations to improve TE reporting should be designed on a case-by-case basis.