Official report on the Approach to tax expenditures
This official report provides more insight into tax expenditures in the Netherlands, addressing their effect and performance both from the perspective of the tax system and at the level of individual tax expenditures. In this report, 116 tax expenditures were assessed on four criteria: 1) effectiveness and efficiency, 2) rationale for government intervention, 3) complexity in implementation and enforcement and 4) feasibility. The official report concludes that, at a system level, tax expenditures lead to higher tax rates, more complexity and higher implementation and enforcement costs. Tax expenditures also make the system vulnerable to improper use and are sometimes at odds with system goals, including the ability-to-pay principle. If the tax system is used instrumentally, then tax expenditures must be effective and efficient, whilst still serving the public interest.