The Council on Economic Policies (CEP) and FIPECO are organizing a seminar to discuss the role of tax expenditures in fiscal policy in France and other countries.
Two presentations – the first providing an overview of tax expenditure policy across different countries, and the second on the recently published Tax Expenditures Country Report (TECR) on France – will set the stage and initiate the discussion among participants.
Background
Tax expenditures are preferential tax treatments that reduce public revenues and tax obligations of beneficiaries. According to the Global Tax Expenditures Database (GTED), the average global revenue forgone over the 1990-2022 period is 3.8% of GDP and 23% of tax revenues. Several G20 countries, such as Australia, Canada, and the United States, forgo more than 6% of GDP through tax expenditures.
However, despite their size and importance, the lack of transparency is striking. According to the GTED, half of the 218 jurisdictions worldwide do not publish any official report on tax expenditures. Moreover, even when information is published, the quality, regularity, and scope of disclosure vary greatly and are often considerably poor. The Global Tax Expenditures Transparency Index (GTETI), which measures the transparency of official and publicly available national reports on tax expenditures, aggregates scores assigned to each country based on five dimensions (themselves broken down into 25 indicators): Public availability, Institutional framework, Methodology and scope, Descriptive tax expenditure data, and Tax expenditure assessment. According to the latest version of the GTETI, the average score of all countries combined is 45.6 points (out of 100 points), while South Korea’s score (the highest-ranking country) reaches 76.1 points, indicating not only that general opacity in tax expenditures is striking but also that even the best-performing countries have significant room for improvement.
France ranks fifth among the 105 evaluated countries, behind South Korea, Indonesia, Canada, and Germany. However, information could be significantly improved in France as well. In 2023, the cost of tax expenditures published in the draft finance bill (PLF) amounted to €82.9 billion. That said, this figure is only an estimate for 125 of the 387 reported tax expenditures in the PLF for 2025.
Tax Expenditures Country Reports: France
The GTED and GTETI offer unlimited access to all official and public data on tax expenditures, paving the way for various types of analyses and debates that would have been impossible without this information sources. However, for several reasons, comparing tax expenditures between countries remains challenging. Indeed, while international and regional engagement can improve tax expenditure design, for example, but not exclusively, in international taxation; existing differences in governance and institutional structures make tax expenditure design a topic that must be discussed at the national level.
In this context, the Council on Economic Policies (CEP) and the German Institute of Development and Sustainability (IDOS) recently launched the Tax Expenditures Country Reports (TECRs) series, consisting of country-specific reports that follow a standardized structure and provide in-depth analysis of national tax expenditure systems. Each TECR focuses on topics such as transparency, fiscal cost, and evaluations (ex-ante and ex-post) of tax expenditures, as well as the political economy surrounding their reform. The TECR pour la France – written by François Ecalle (FIPECO) – was recently published. The author also addresses a questionable change in the methodology for estimating revenue forgone from VAT-related tax expenditures, which reduced them from about €20 billion in previous PLFs to about €10 billion in the 2024 PLF. As described by the author, without this methodological change, the cost of tax expenditures in 2023 amounts to €96.1 billion instead of €82.9 billion in the PLF. This and more information can be found in the French TECR.