Reducing Tax Expenditures: One Route to Reform?

Belgium is well known as a “high tax” country and this, including the clear choice made to offer a high level of social protection, reflects the size of its government. From a tax-policy point of view, the main concerns are the high share of taxes on labor, with a relatively low taxation of consumption and a weak environmental taxation, and the magnitude of tax expenditures. This paper discusses the second concern. We start from the definition of tax expenditures and describe the main trends and the most important tax expenditures. After some insights into cost-benefit analysis, we discuss options for reforms. JEL: H20, H24, H25