Advertisement

Tax Incentives as a Creative Industries Policy Instrument

  • Sigrid HemelsEmail author
Chapter
Part of the Creative Economy book series (CRE)

Abstract

The primary function of tax legislation is to raise a budget for government expenditure. Tax incentives can also be used to achieve creative industries policy goals. This book defines tax incentives as a provision in tax legislation that departs from the benchmark tax structure and favors creative industries, resulting in a reduction or postponement of tax income for the government. Tax incentives must be considered relative to alternative policy tools such as spending programs, regulations and information campaigns . Many tax experts are not in favor of tax incentives. Some of their arguments apply to direct subsidies as well, but others are more specific to tax incentives. Even though tax incentives are not without fault, the OECD has formulated conditions for successful tax incentives. Not only fiscal policy arguments but also creative industries policy objectives are of importance when deciding on the most appropriate instrument. From the latter perspective, tax incentives have several benefits. A prerequisite for the effective and efficient use of tax incentives is that they are accounted for, controlled and evaluated in the same way as direct subsidies. As this is currently not always the case, tax incentives are, in that respect, inferior to direct subsidies.

Keywords

Bench mark tax structure Exemption Allowance Credit Rate relief Tax deferral Fairness Complexity Tax expenditure budget Sunset legislation 

References

  1. Anderson B (2008) PowerPoint presentation at the 5th annual meeting of OECD-Asia Senior Budget Officials, 10–11 January 2008, Bangkok. http://www.oecd.org/gov/budgeting/39944419.pdf. Accessed 8 July 2015
  2. Christiaanse JH (1977) Tax expenditures. Weekblad fiscaal recht, pp 69–75Google Scholar
  3. Department for Culture, Media and Sport (2015) Cultural gifts scheme guidance. http://www.artscouncil.org.uk/media/uploads/doc/CGSguidance27january2015.docx. Accessed 28 July 2015
  4. European Commission (1997) Report from the commission to the council and to the European parliament in accordance with Article 12(4) of the sixth council directive of 17 May 1977 on the harmonisation of the laws of the Member States relating to turn-over taxes—Common system of value added tax: uniform basis of assessment COM(97) 559 final Google Scholar
  5. Feldstein M (1980) A contribution to the theory of tax expenditures: the case of charitable giving. In: Araron HJ, Boskin MJ (eds) The economics of taxation. Brookings Institution, Washington, DC, pp 99–122Google Scholar
  6. Grampp WD (1989) Pricing the priceless: art, artists, and economics. Basic Books, New YorkGoogle Scholar
  7. Globerman S (1980) Direct versus indirect aid to the arts: a Canadian perspective. J Cult Econ 2:15–22CrossRefGoogle Scholar
  8. Heithuis E (2013) OverBelastingen 2.0. Inaugural lecture Open Universiteit HeerlenGoogle Scholar
  9. IBP (2012) International budget survey. http://survey.internationalbudget.org/. Accessed 18 July 2015
  10. IMF (2007) Code of good practices on fiscal transparency. http://www.imf.org/external/np/pp/2007/eng/051507c.pdf. Accessed 18 July 2015
  11. Jefferson T (1789) Letter to James Madison Paris 6 September 1789. http://www.let.rug.nl/usa/P/tj3/writings/brf/jefl81.htm. Accessed 18 July 2015
  12. Kavelaars P (2014) Giftenaftrek kan worden afgeschaft. Weekblad fiscaal recht, p 607Google Scholar
  13. Kraan D-J (2004) Off-budget and tax expenditures. OECD J Budg 4(1):121–142. OECD, Paris. http://www.oecd.org/gov/budgeting/39515114.pdf. Accessed 8 July 2015
  14. Lowi ThJ (1969) The end of liberalism: ideology, policy, and the crisis of public authority. Norton, New YorkGoogle Scholar
  15. Mann FK (1947) The threefold economic function of taxation. Openbare Financiën (1/2):5–17 Google Scholar
  16. Manvel AD (1971) Opening comments. In: Surrey SS et al (eds) Tax incentives. Heath Lexington Books, Massachusetts 1Google Scholar
  17. McDaniel PR (1976) The tax expenditure concept: theory and practical operation. Maandblad Belasting Beschouwingen, pp 245–256Google Scholar
  18. Ministerie van Financiën (1987) Belastinguitgaven in de Nederlandse inkomstenbelasting en de loonbelasting. Staatsuitgeverij, ’s-GravenhageGoogle Scholar
  19. Ministerie van Financiën (2010) Beleidsdoorlichting evaluaties belastinguitgaven. www.rijksbegroting.nl/binaries/pdfs/beleidsdoorlichtingen/beleidsdoorlichtingen-06-2010/fin-belastinguitgaven.pdf. Accessed 18 July 2015
  20. Ministerie van Financiën (2014a) Inkomstenbeperkende regelingen en belastinguitgaven. In: Miljoenennota 2015. http://www.rijksbegroting.nl/2015/voorbereiding/miljoenennota,kst199383_6.html. Accessed 18 July 2015
  21. Ministerie van Financiën (2014b) Toelichting op de belastinguitgaven. In: Miljoenennota 2015. http://www.rijksbegroting.nl/2015/kamerstukken,2014/9/19/kst812061_4.html. Accessed 18 July 2015
  22. Ministerie van Financiën (2015) Rijksbegrotingsvoorschriften 2015. http://rbv.minfin.nl/2015. Accessed 21 July 2015
  23. Mourato S, Mazzanti M (2002) Economic valuation of cultural heritage: evidence and prospects. In: De la Torre M (ed) Assessing the values of cultural heritage. The Getty Conservation Institute, Los Angeles, pp 51–73. http://www.getty.edu/conservation/publications_resources/pdf_publications/pdf/assessing.pdf. Accessed 21 July 2015
  24. OECD (1984) Tax expenditures. A review of the issues and country practices. OECD, ParisGoogle Scholar
  25. OECD (2010) Tax expenditures in OECD countries. OECD, ParisGoogle Scholar
  26. OECD (2015) Recommendation of the council on budgetary governance. OECD, ParisGoogle Scholar
  27. O’Hagan J (2011) Tax concessions. In: Towse R (ed) A handbook of cultural economics, 2nd edn. Edward Elgar, Cheltenham/Northampton, pp 408–412Google Scholar
  28. Philipps L (2012) The globalization of tax expenditure reporting: transplanting transparency in india and the global south. Comparative Research in Law & Political Economy. Research Paper No. 43/2012. http://digitalcommons.osgoode.yorku.ca/cgi/viewcontent.cgi?article=1034&context=clpe. Accessed 18 July 2015
  29. Schuster JMD (1979) Income taxes and the arts: tax expenditures as cultural policy. Massachusetts Institute of Technology, Massachusets. http://dspace.mit.edu/handle/1721.1/70147. Accessed 8 July 2015
  30. Schuster JMD (1987) Issues in supporting the arts through tax incentives. J Arts Manag Law 16:31–50Google Scholar
  31. Simon JG (1987) The tax treatment of nonprofit organizations: a review of federal and state policies. In: Powell WW (ed) The nonprofit sector. Yale University Press, New Haven/LondonGoogle Scholar
  32. Stevers ThA (1978) Verslag van het debat. In: Grapperhaus, FHM, Een beschouwing over begrip en betekenis van belastinguitgaven in Nederland. Geschriften van de Vereniging voor Belastingwetenschap, nr. 147. Kluwer, Deventer 7–29Google Scholar
  33. Surrey SS et al (1971) Tax incentives. Heath Lexington Books, MassachusettsGoogle Scholar
  34. Surrey SS (1973) Pathways to tax reform. Harvard University Press, CambridgeCrossRefGoogle Scholar
  35. Surrey SS (1981) The concept of tax reliefs—Its relation to tax policy and budget policy. In: Häuser K (ed) Subventions, avantages fiscaux et prix/Subsidies, tax reliefs and prices. Éditions Cujas, Paris, pp 35–58Google Scholar
  36. Surrey SS, McDaniel PR (1985) Tax expenditures. Harvard University Press, CambridgeGoogle Scholar
  37. Surrey SS, Sunley EM Jr (1976) General Report. Cahiers de droit fiscal international, vol LXIa. Kluwer, Deventer, pp 15–63Google Scholar
  38. Uemura T (2009) An estimation of tax expenditure in Japanese income tax from the viewpoint of the fiscal transparency. Govern Audit Rev 16(3):3–17. http://www.jbaudit.go.jp/english/exchange/pdf/e16d01.pdf. Accessed on 28 July 2015
  39. Van der Ploeg R (2002) In art we trust. De Economist 150:333–362CrossRefGoogle Scholar
  40. Van Weeghel S (2015) Snoei in oerwoud aan aftrekpostjes. https://actueel.pwc.nl/diensten-en-sectoren/tax/fiscalist-stef-van-weeghel-snoei-oerwoud-aan-aftrekpostjes/. Accessed 8 July 2015
  41. Wagner AHG (1880) Finanzwissenschaft. C.F. Winter’sche Verlagshandlung, Leipzig/HeidelbergGoogle Scholar
  42. Willis JRM, Hardwick PJW (1978) Tax expenditures in the United Kingdom. Heinemann Educational Books, LondonGoogle Scholar
  43. Whitehouse E (1999) The tax treatment of funded pensions. Social Protection Discussion Paper Series no. 9910. World Bank, Washington, DC. http://mpra.ub.uni-muenchen.de/14173/1/MPRA_paper_14173.pdf. Accessed 8 July 2015

Copyright information

© Springer Science+Business Media Singapore 2017

Authors and Affiliations

  1. 1.Department of Tax Law, Erasmus School of LawErasmus University RotterdamRotterdamThe Netherlands
  2. 2.Allen & OveryAmsterdamThe Netherlands

Personalised recommendations