A Basic Framework for Evaluating Value Added Tax Expenditures

The label tax expenditure provides a strong indication as to what the term is intended to apply to any use of the tax system designed to provide a financial benefit. As such, a tax expenditure can be rather generally considered to be any special provision in the tax system which allows for a reduction in the amount of tax which would otherwise be due. The key term in that definition is special provision; any reduction resulting from a normal provision would, then, not be considered a tax expenditure. The starting place for any evaluation of tax expenditures is to then determine which the normal provisions are and which the special provisions are for the tax system.