Reforming Tax Expenditures in Italy: What, Why, and How?
IMF Working Papers, January 16, 2014
Source details
- Canonical URL
- Reforming Tax Expenditures in Italy: What, Why, and How?
Other formats
Bibliographic details
- Authors: Justin Tyson
- Published: January 16, 2014
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484370773.001
Summary
- The IMF has advised country authorities to roll back tax expenditures as a way to support fiscal consolidation efforts.
- Authorities are urged to evaluate tax expenditures according to clear criteria, assessing their impact on:
- public finances,
- economic efficiency,
- equity, and
- administrative and compliance costs.
- This paper analyzes tax expenditures in Italy, considering:
- the extent to which tax expenditures can be considered part of an optimal tax system, and
- possible reforms.
Analysis and Scope
- Subject areas covered: Corporate income tax, Personal income tax, Public financial management (PFM), Tax allowances, Tax expenditures, Taxes, Value-added tax.
- Keywords included: budget process, Corporate income tax, differential VAT regime, draft tax reform law, efficiency, equity, expenditure, expenditure program, government, labor tax wedge, optimal taxation, Personal income tax, single tax, substitute tax regime, tax, Tax allowances, tax design, tax expenditure, tax expenditure cost, Tax expenditures, tax norm, Value-added tax, WP.
- The Working Paper aims to inform debate and elicit comments; it does not necessarily represent IMF views:
- "This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate."
Findings (as presented)
- Rolling back tax expenditures is presented as a tool to support fiscal consolidation.
- Evaluation of tax expenditures should be based on explicit criteria that include impacts on public finances, efficiency, equity, and administrative/compliance costs.
- The paper examines whether existing tax expenditures in Italy align with characteristics of an optimal tax system and identifies areas for reform.
Policy Recommendations (as presented)
- Systematically review and evaluate tax expenditures using clear, consistent criteria.
- Assess each tax expenditure’s effects on:
- public finances,
- economic efficiency,
- equity, and
- administrative and compliance costs.
- Consider rolling back tax expenditures that do not meet evaluation criteria to support fiscal consolidation and improve tax system efficiency and equity.
Content in this bundle
- _wp1407 - References