Reforming Tax Expenditures

  • A significant amount of government funding worldwide is channeled through tax breaks, aka “tax expenditures”, in the form of exemptions, deductions, credits, deferrals, and reduced tax rates.

    Despite their magnitude and the fact that their net impact on government budgets is the same as direct spending, new tax expenditure provisions are introduced regularly without adequate scrutiny. Moreover, transparency on existing tax expenditures is limited. As a result, they are hardly ever subject to sound analyses and debate. This lack of attention and evaluation is particularly alarming as tax expenditures are not only often ineffective in reaching their stated objectives, but also frequently trigger negative social and environmental side effects.

    Against this background – and with heightened urgency in view of the challenges from COVID-19 – the reform of tax expenditure systems is vital. As governments worldwide face growing funding needs to respond to the pandemic, they cannot afford to lose revenues to ill-designed tax breaks. They cannot afford to continue offering tax deductions that disproportionally benefit higher-income households. And they cannot afford to maintain tax incentives that harm the environment and thus the sustainability of their societies. To come back stronger, reforming tax expenditures is critical.

    With this in mind, CEP has launched a series of online roundtables to put a spotlight on the urgent need for tax expenditure reform. We started with a focus on Europe and deepdives into tax expenditures related to corporate income taxes (11 Feb), consumption taxes (18 Feb) and personal income taxes (25 Feb)


  • Thursday, 11 February 2021, 15.00-17.00 CET
    Reforming Tax Expenditures in Europe – Corporate Income Taxes
    Ana Cinta González Cabral, Economist,Tax Policy and Statistics Division, OECD
    Ron Davies, Full Professor of Economics, University College Dublin
    Lucas Millan, Senior Researcher, Tax Justice Network
    Henrique Alencar, Tax Policy Advisor, Oxfam
    Chair: Agustin Redonda, Senior Fellow, CEP

    Video Recording here.
    Thursday, 18 February 2021, 15.00-17.00 CET
    Reforming Tax Expenditures in Europe – Consumption Taxes
    Paul Tang, MEP and Chair of the Subcommittee on Tax Matters (FISC), European Parliament
    Luisa Dressler, Economist, Tax Policy and Statistics Division, OECD
    Marco Fantini, Chief Economist, VAT Unit, Directorate-General for Taxation and Customs, European Commission (Slides)
    Lourdes Sanchez, Senior Policy Advisor and Lead, International Institute for Sustainable Development (IISD) (Slides)
    Chair: Agustin Redonda, Senior Fellow, CEP

    Video Recording here.
    Thursday, 25 February 2021, 15.00-17.00 CET
    Reforming Tax Expenditures in Europe – Personal Income and Wealth Taxes
    Åsa Gunnarsson, Professor in Tax Law, Umeå University
    Salvador Barrios, Team Leader, Fiscal Policy Analysis Team, Joint Research Centre, European Commission
    Arun Advani, Professor of Economics, University of Warwick
    Barbara Bratta, Senior Economist, Italian Ministry of Economy and Finance (Slides)
    Chair: Agustin Redonda, Senior Fellow, CEP

    Video Recording here.