Significance of Tax Expenditures for Budgets of Local Governments: the Case of Poland

Abstract

The article presents the characteristics of tax expenditures in local governments in Poland. Firstly, the concept of these instruments, especially in comparison to budget spending, and the methods of their evaluation is discussed. International practices in this field as well as reporting in Poland are addressed and described. Secondly, light is cast upon the role of tax expenditures in the economy. Thus their advantages and disadvantages are exposed. Furthermore, the paper analyses the value and structure of tax expenditures in local governments in Poland between 2007 and 2013. Furthermore their significance for the budgets of these entities and the major types of tax expenditures in local taxes are analyzed. Some of the goals of the implementation of tax expenditures there are also addressed. Finally, the areas of the local economy, which were supported by the tax expenditures in local governments in Poland, are presented. Consequently, this analysis facilitates the outlining of some principles of the enforcement of tax expenditures and their interactions within the economy. To this end, the financial data of the Ministry of Finance, Central Statistical Office and the relevant information of the Bureau of Research of the Parliament in Poland has been examined.