Simplifying Tax Laws as a Result of Budgeting and Accounting for Tax Incentives Differently

Abstract

Most tax lawyers are not very fond of tax incentives. When talking about simplifying taxes, an initial approach might be to abolish tax incentives. However, in some cases this abolishment may cause the loss of a useful and effective instrument for government policy. A good example of a policy field that can benefit from certain tax incentives is cultural policy.

The advantages that some tax incentives offer do not mean that no tax incentives should be abolished. It is important that all tax incentives are evaluated on a regular basis to check whether they are (still) in line with policy goals and whether they are (still) the most efficient and most effective way of achieving these goals. Currently this is not always the case. To solve this problem the article proposes a change to the way in which tax incentives are budgeted and accounted for, which should give an incentive to evaluate tax incentives in a similar way as that in which direct subsidies are evaluated. The side effect of this change could be the abolishment of certain tax incentives and the simplification of tax laws.

Keywords: tax law, tax incentives, cultural policy

JEL Classification: K34, H21