QoG lunchseminarium med Christian von Haldenwang

Abstract:

The seminar will introduce the concept of tax expenditures (TEs) and present findings from a research paper that draws on the recently released Global Tax Expenditures Database (GTED) to explore the use of TEs in developing countries. The underlying research is based on a cross-country panel dataset for 101 countries, covering the years 2000 to 2020. First, it estimates the effect of GDP per capita and other development indicators on the extent of TE use, measured as revenue forgone. Results indicate that income levels are a key driver of the size of revenue forgone. Other development and governance indicators (e.g. control of corruption, natural resource rents or trade openness) are only relevant for TE use depending on a country’s income level. Second, the paper explores the effect of development indicators on patterns of TE use, focusing on type of tax, beneficiaries and type of TE. The main findings here are that poorer countries provide less TEs on goods and services taxes, less TEs for private households, but more TEs via tax exemptions. We will discuss the policy relevance of the findings in times of global fiscal stress.