Inventory of Federal Tax Expenditures

Each year, an annex to the Ways and Means Budget is published under the name “Inventory of exemptions, allowances and reductions that influence government revenue”, abbreviated “Inventory of Federal Tax Expenditures”. The purpose of this Inventory is to inform Parliament about the budgetary cost of tax measures. In particular, these are derogations from the general tax system which aim to achieve certain objectives which could also be pursued via direct expenditure. The Inventory aims to increase budgetary transparency and to establish closer links between tax and direct spending. This inventory is an appendix to the Ways and Means of Federal Government Budget and is intended to inform Parliament of the cost of tax expenditures decided by the federal government. On the basis of this principle, it should not include “abatements, exemptions and reductions” granted or maintained by the Regions within the scope of their fiscal powers. Thus, there are no chapters in this Inventory relating to inheritance tax, withholding tax or movement tax. However, regionalised tax expenditure is maintained in the IPP chapter of the Inventory in order to provide an overview for this tax for which there are both federal and regional tax expenditures (indicated by “FED vs REG year 2018”). The Inventory is based on the definition of the concept of “tax expenditure” originally proposed by the Conseil Supérieur des Finances: “A lesser revenue from tax incentives arising from a derogation from the general system of a particular tax system for certain taxpayers or certain economic, social, cultural, etc. activities, which could be replaced by a direct subsidy”. All figures are reported in millions of euros in the above-mentioned tables. An indication “X” means that the amount could not be calculated due to the lack of sufficient statistical data available. Grey areas indicate that the measure has either not yet entered into force or is no longer applicable. The inventory also provides details on the classification by budget item of provisions which are tax expenditure (see summary tables). The classification by budget item corresponds to that used for direct expenditure. However, this classification remains indicative A more detailed description of the Federal Tax Expenditure Inventory is available on the House of Representatives website (Doc 55 1577/006) and below. The introduction describes in particular what is meant by ‘general system’ by type of tax. It also provides details of the method of calculating the revenue loss that goes hand in hand with tax expenditures. In addition, the Inventory contains a summary of the most important results and a detailed table.