2014年-IMF国际货币组织全球_Reforming_Tax_Expenditures_in_Italy_What_Why_and_How__16页_461kb

Summary of "Reforming Tax Expenditures in Italy: What, Why, and How?"

Core Content

This paper explores the concept, rationale, and potential reforms of tax expenditures in Italy. It evaluates their role in the fiscal system, their impact on economic efficiency, equity, and administrative costs, and suggests ways to identify, quantify, and reform them in line with optimal tax principles.

Main Points

What Are Tax Expenditures?

• Tax expenditures refer to government revenues foregone due to differential or preferential tax treatment.
• They include allowances, exemptions, rate relief, credits, and tax deferrals.
• Tax expenditures are common across advanced economies, and in Italy, they are particularly significant.

Why Reform Tax Expenditures?

• Tax expenditures can compromise fairness, as they often benefit higher-income individuals more.
• They may be inefficient and poorly targeted, leading to unintended behavioral distortions.
• They are vulnerable to lobbying, as they bypass the regular budgetary scrutiny and do not require annual renewal.
• They can be complex and costly to administer, especially if not properly monitored.

Are All Tax Expenditures Bad?

• Not all tax expenditures are unjustifiable. Some are efficient and fair, such as those that align with broader tax design principles.
• Tax expenditures can offer administrative economies of scale compared to direct spending.
• However, they may not always be the most effective way to achieve policy goals, especially when compared to well-targeted social spending.

Identification and Quantification of Tax Expenditures

• A benchmark tax system is essential for identifying tax expenditures.
• There is no consensus on how to define this benchmark, with two main approaches:
  • Theoretical approaches based on income, consumption, or value-added tax (VAT) principles.
  • Country-specific approaches based on existing tax laws and identifying preferential treatment.
• In Italy, the Ministry of Economy and Finance (MEF) identified 720 tax expenditures, amounting to 16% of GDP.
• While comprehensive, it is not feasible to eliminate all tax expenditures, as some are integral to the tax system.

Evaluation Criteria for Tax Expenditures

Tax expenditures should be evaluated using the following criteria:

1. Economic Efficiency: Do they promote or hinder efficiency? Do they influence behavior in desirable or undesirable ways?
2. Fairness: Are similar individuals treated similarly? Do they account for differing tax capacities?
3. Simplicity and Administration: Are they easy to implement and administer?
4. Lobbying Vulnerability: Do they benefit specific interest groups and are they subject to scrutiny?

• Tax expenditures should be compared with alternative spending measures to assess their relative merits.

Types of Tax Expenditures in Italy

A. Personal Income Tax (PIT)

• The largest PIT tax expenditures are:
  • Tax credit for wage income: 37.73 billion (2.41% of GDP)
  • Substitute tax on capital income: 13.17 billion (0.84% of GDP)
  • Tax credit for dependent relatives: 10.50 billion (0.67% of GDP)
  • Exemption for employee pension contributions: 10.10 billion (0.64% of GDP)
  • Exemption for self-employed pension contributions: 4.31 billion (0.28% of GDP)
  • Tax credit for medical expenses: 2.36 billion (0.15% of GDP)
• Total PIT tax expenditures: 83.26 billion (5.32% of GDP)

B. Corporate Income Tax (CIT)

• Key CIT tax expenditures include:
  • Exemption for foreign-source dividends: 8.38 billion (0.54% of GDP)
  • Substitute tax on capital gains from restructuring and mergers: 7.43 billion (0.47% of GDP)
  • Full deduction of social security costs from IRAP: 6.69 billion (0.43% of GDP)
  • Substitute tax on capital gains from asset revaluation: 6.40 billion (0.41% of GDP)
  • Substitute tax on capital gains from extraordinary operations: 4.18 billion (0.27% of GDP)
• Total CIT tax expenditures: 33.08 billion (2.11% of GDP)

C. Value Added Tax (VAT)

• The largest VAT tax expenditures are:
  • Reduced VAT rate at 10%: 24.60 billion (1.57% of GDP)
  • Reduced VAT rate at 4%: 14.60 billion (0.93% of GDP)
• Other VAT expenditures include:
  • Special regime for agriculture: 0.31 billion (0.02% of GDP)
  • Special regime for publishing: 0.24 billion (0.02% of GDP)
  • Exemptions for charitable and educational sectors: 0.17 billion (0.01% of GDP)
  • Exemption for funeral services: 0.12 billion (0.01% of GDP)
• Total VAT tax expenditures: 40.04 billion (2.56% of GDP)

D. Excise Tax

• Key excise tax expenditures:
  • Reduced excise tax for public transport: 1.67 billion (0.11% of GDP)
  • Reduced excise tax for agriculture: 0.96 billion (0.06% of GDP)
  • Exemption for low energy consumption houses: 0.55 billion (0.04% of GDP)
• Total excise tax expenditures: 3.17 billion (0.20% of GDP)

E. Other Taxes

• Some large tax expenditures have been removed, such as those related to property and transfer taxes.
• The paper highlights the importance of reviewing and harmonizing tax expenditures, especially those that may be better achieved through direct spending.

Priority for Reform

• Tax expenditures that should be prioritized for reform include:
  • VAT reduced rates (2.50% of GDP): Some could be eliminated or harmonized.
  • VAT exempt regimes (2.52% of GDP): Top-down estimate, some are required by EU law.
  • Fuel excise tax exemptions and reduced rates (0.20% of GDP): Could be replaced with structural reforms.
  • Tax credit for medical expenses (0.15% of GDP): Better achieved through direct spending.
  • Mortgage interest tax credit (0.09% of GDP): Should be reviewed carefully due to potential budgetary impact.
  • CIT substitute taxes for restructuring (0.88% of GDP): Objectives may be better met through structural reforms.

Concluding Remarks

• Tax expenditures are an important part of Italy’s fiscal system but are often not well-targeted or efficient.
• They should be regularly and systematically reviewed, similar to direct government spending.
• Reforms should aim to increase transparency, improve efficiency, and enhance equity.
• The annual publication of tax expenditures and external review are recommended as part of the reform process.

Key Information

• Total tax expenditures in Italy: 16% of GDP (as identified by MEF).
• Top tax expenditures:
  • PIT: 5.32% of GDP
  • CIT: 2.11% of GDP
  • VAT: 2.56% of GDP
  • Excise tax: 0.20% of GDP
• Potential savings from reform could be significant, with estimates suggesting that up to 6.44% of GDP could be saved through targeted reviews.
• Reform steps include:
  • Systematic and regular review of tax expenditures.
  • Combining tax and spending reviews.
  • Legislatively imposing expiry clauses on tax expenditures.
  • Ensuring that tax expenditures are evaluated in the context of alternative spending measures.