ABSTRACT

This chapter introduces the concept of fiscal welfare and discusses its overlap with tax expenditure and tax breaks for social purposes (TBSPs). The limited evidence on the scale of tax benefits and the even less frequent analysis of their redistributive effects are examined before considering the variety of ways in which fiscal welfare is used with particular attention to family and retirement. The analysis of TBSPs by Willem Adema and colleagues at Organization of Economic Co-operation and Development provides valuable and detailed evidence on many elements of fiscal welfare, although by no means a comprehensive accounting. In most European Union countries, fiscal welfare provides part of child benefit packages with tax credits growing in importance. Fiscal welfare and tax expenditures have been the specific focus of policy, but the worldwide move towards lower taxes in the mid-1980s was accompanied by measures to broaden the tax base that abolished some and restricted other tax benefits.