More extensive impact assessments have been carried out on the effects of individual tax subsidies. However, for one third of the tax subsidies, it is not possible to calculate even the loss of tax revenue caused by them. In order for decision-makers to better assess the need for and appropriateness of each existing tax subsidy, the information available on them should be increased and improved. Current calculation practices are largely based on the 2009 report. The amount of information available may have since expanded, and some estimates of the magnitude of the tax subsidies could thus be calculated. In addition, it would be useful to distinguish in the list of tax aid from other forms of tax aid in connection with the temporal allocation of income or expenditure. It would also be a good idea to indicate the purpose of each tax subsidy in the list of tax subsidies.

Recommendation from Previous Audit

In an audit carried out in 2007, the Audit Office recommended that performance targets should be set for tax subsidies and their implementation should be monitored. Such performance targets have still not been set and the actual impact of the subsidies is not being monitored. As tax subsidies significantly reduce tax revenues and thus weaken public finances, their effects and costs should also be monitored.

When introducing new tax subsidies, it should also be justified why tax subsidies have been chosen as a policy instrument instead of direct subsidies or other means. The choice of policy instrument between tax support and direct support should be made on the basis of the difference in efficiency. If no genuine consideration and rationale is chosen for the choice of policy instrument, there is a risk that tax subsidies will be used to circumvent the fiscal framework. The framework procedure is without prejudice to the provision of new tax aid in the same way as the granting of direct aid. Thus, by choosing tax support as a policy option, it is possible to stay within the expenditure framework, even if expenditure and the need to borrow are in practice increased.

The Professionals’ Views

Given the wide-ranging economic impact of taxation, it is important that the related impact assessment and legislative preparation is carried out carefully and using the available data base. The Audit Office recommends that the Ministry of Finance. Prior to filing business taxes this is important.

• Review at least the objectives of the most significant tax subsidies and increase and diversify the assessment of the impact of tax subsidies.
• Ensure that the level of calculations and the speed of delivery are maintained when revising the calculation models. In this connection, the maintenance and usability of the model must also be ensured even in the event of a change of persons. In addition, documentation must be taken care of.
• Assesses, in addition to the effects of individual tax changes, the combined effects of several changes on different sectors of the economy and actors.