Ex-Post Evaluation of Tax Legislation in the Netherlands

Svensk Skattetidning, No. 9, pp. 754-764, 2011

8 Pages Posted: 19 Dec 2011  

Sigrid Hemels

Erasmus University Rotterdam (EUR) - Erasmus School of Law

Date Written: October 18, 2011

Abstract

Since the end of the 20th century, ex-post evaluation of tax legislation has consistently been part of the agenda of the Dutch government. In 2005, the 2001 Income tax Act was evaluated. In addition, several tax expenditures are evaluated each year. Tax expenditures can be a controversial aspect of tax legislation. In general, tax expenditures have the drawback that, compared with direct subsidies, there is less information and less democratic control on these expenditures than on direct subsidies which are accounted for in the annual budget. In the past 20 years, the Netherlands has taken several measures to improve the accountability of tax expenditures. One of the measures in the 2001 Budget was the introduction of a framework consisting of several questions which have to be answered before a tax expenditure can be introduced. This framework has been amended several times. The current framework consists of the following questions: (1) Is the problem clear?; (2) Is the object stated clearly and unambiguously?; (3) Can it be proven why financial intervention is necessary?; (4) Can it be proven why a subsidy is preferred over a levy?; (5) Can it be proven why a tax incentive is preferred over a direct subsidy?; and (6) Is the evaluation of the provision sufficiently safeguarded? An evaluation of a proposed tax expenditure, therefore, has to be guaranteed before the tax expenditure is introduced. In this paper the Dutch techniques for ex-post evaluation are discussed briefly. These include accounting for tax expenditures and similar provisions in a tax expenditure report and a tax expenditure overview, evaluation reports and, possibly, sunset legislation.

Keywords: tax expenditure, evaluation, sunset legislation

JEL Classification: H21, K34

Suggested Citation

Hemels, Sigrid, Ex-Post Evaluation of Tax Legislation in the Netherlands (October 18, 2011). Svensk Skattetidning, No. 9, pp. 754-764, 2011. Available at SSRN: https://ssrn.com/abstract=1974650

Sigrid Hemels (Contact Author)

Erasmus University Rotterdam (EUR) - Erasmus School of Law ( email )

3000 DR Rotterdam
Netherlands

HOME PAGE: http://www.esl.eur.nl/profile/profiel_metis/1112068

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