Tax expenditures are tax benefits that governments use worldwide to pursue various policy goals such as attracting investment, boosting innovation and fighting poverty. Tax expenditures are costly, as they lower government revenue and the tax liability of the beneficiary. The global average of tax revenues forgone over the period 1990-2020 is 3.8 per cent of GDP, or 24.2 per cent of tax revenue (source: GTED Flagship Report 2021). Moreover, tax expenditures are often ineffective in reaching their stated goals, and can be even damaging with regard to equality or sustainability. Yet, the lack of transparency in this area is striking: only 97 out of 218 jurisdictions have reported on tax expenditures at least once since 1990. The quality, regularity and scope of such reports are highly heterogeneous and, in many cases, lag significantly behind minimum standards.
The Addis Tax Initiative (ATI) acknowledges the relevance this topic holds for member countries and the international community in general. Tax expenditures have a significant impact on countries’ ability to foster domestic revenue mobilisation (DRM) and, ultimately, attain the Sustainable Development Goals (SDGs). They often endanger the transparency of national budgets and policies if not monitored closely and assessed consistently. In light of its mission to promote development cooperation towards achieving the SDGs, the ATI agreed to apply coherent and coordinated policies that foster DRM. The Commitment 3 of the ATI Declaration 2025 states: “We will improve tax transparency by publishing tax expenditures regularly to facilitate cost-benefit assessments, ultimately helping to reduce wasteful tax expenditures, improving taxpayers’ trust, and creating a more level playing field for all types of businesses. We will improve inter-agency cooperation on tax expenditures and foster the coordination of granting tax concession activities.”
Against this background, ATI is co-organising the 9th International DRM Workshop with the German Development Institute (DIE/GDI) and the Council on Economic Policies (CEP) to explore the relevance of tax expenditures to foster DRM. The series “International Workshops on DRM”, organised by DIE since 2011, brings together scholars, government officials, representatives from international organisations and other experts to discuss ongoing research and policy initiatives in specific areas of taxation, and assess their policy implications. It is designed to build bridges between academic research and development policy.
This year’s workshop will take place online, from 9 to 11 November 2021. The workshop will build, among others, on data of the recently launched Global Tax Expenditures Database (GTED) - the first database providing timely and consistent information on tax expenditures on a global scale, developed by CEP and DIE - and on ATI members´ experiences in improving transparency, reporting and promoting reforms to rationalise tax expenditures.
The core topics that will be addressed in the workshop include:
- The state of tax expenditure reporting;
- Experiences with setting up / improving tax expenditure reporting in individual countries;
- Main barriers for the estimation and reporting of tax expenditures;
- Tax expenditures in a context of informality;
- Tax expenditures as an instrument of (harmful) tax competition between countries;
- Bringing tax expenditures into the current debate on international tax reform;
- The role of regional tax organisations & the Network of Tax Organisations (NTO);
- Tax expenditure reform in a post-COVID-19 world;
- Decision-making processes to promote reforms & political economy challenges in the context of rationalising tax expenditures.
Academic researchers and development practitioners are invited to submit their contributions. To ensure multi-perspectivity and peer learning, experiences from ATI members are highly welcome. If you or your organisation are interested in contributing to the workshop by presenting ongoing or recently concluded work, kindly send a note including the proposed title and abstract of your presentation (200-500 words) until 20 September 2021 to firstname.lastname@example.org.
The call for contributions can be downloaded here.