The Council on Economic Policies (CEP) and the German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE) launched the «Global Tax Expenditures Database» (GTED): www.GTED.net with an online conference on 16 June 2021. The conference featured a keynote by David Bradbury (OECD), and interventions from Alexander Klemm (IMF), Santiago Diaz de Sarralde (CIAT), Nara Monkam (ATAF), Natalia Aristizabal Mora (UNDESA), Jürgen Zattler (BMZ) and Paul Tang (European Parliament). It was moderated by Stephanie Johnston (Tax Notes) and Emma Agyemang (FT).
The key findings of the GTED Flagship Report presented at the event are here.
Governments use a wide range of policies to pursue public objectives. An important part of their toolkit are the benefits they provide to certain taxpayers through tax breaks – or as many call them “tax expenditures”.
Tax expenditures come in many shapes and forms such as tax incentives for firms, tax deductions for households, and lower tax rates for specific goods. In the United States, tax expenditures reduce federal government revenue by more than 1.4 trillion Dollars a year: that is almost 7% of GDP and roughly one third of federal government spending. The average fiscal cost of tax expenditures across the European Union lies around 4% of GDP, and can even exceed 10% as in Czechia and Finland. Tax expenditures in developing and emerging economies are also significant. For instance, they amount to more than 4% of GDP in Brazil and South Africa, and come close to 8% in Colombia and Senegal.
Yet, despite their magnitude and the fact that their net impact on government budgets is the same as direct spending, tax expenditures are often opaque and hidden from public scrutiny. As a consequence, they are hardly ever assessed in terms of costs and benefits. This is particularly worrisome since tax expenditures are often ineffective in reaching their stated goals and can trigger negative social and environmental side effects, such as exacerbating inequality and contributing to climate change.
Against this background, the Council on Economic Policies (CEP) and the German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE) have launched the «Global Tax Expenditures Database» (GTED) with an online conference on 16 June 2021. The GTED was built by CEP and DIE in a multi-year engagement to increase transparency on tax expenditures and the critical role they play in tax systems around the globe. It brings together the official and publicly available data on tax expenditures, as published by national governments since 1990, and makes it available free of charge online. The platform also includes a repository for blogs, working papers and further publications on tax expenditures as well as events on the topic. As such, we hope that it will contribute to improving transparency, deepening analysis and fostering policy debates on the costs and benefits of tax expenditures and related reforms.