An evaluation efficiency and productivity of tax expenditures in the Turkish tax system

The Government can make public expenditures to protect peoples social life and to encourage economic activity or can make arrangement on the tax system to make less tax burden on the tax payers or activities. These regulations are defined as ?Tax Expenditures? in the tax system.Tax expenditure concept undisclosed expenses of the taxes directed to collection of revenues. Tax expenditures are defined as, departures from a normal benchmark and generally accepted tax structure which includes a revenue loss and designed to achieve certain economic and social objectives. In practice, tax expenditures take part as tax exemptions, tax exceptions, deductions, reduced tax rates, tax credits, tax deferrals and the others in the tax systems. The most important problem about the tax expenditure concept is the definition of itself and determination of tax expenditures.If a tax expenditure is defined as ?preferential tax provisions which are derived from standard tax structure?, there is no general consensus on the inclusions of standard tax structure, which tax provisions are preferential provisions and of which preferential tax provisions are tax expenditures. These provisions exist in most tax systems and aim to encourage some economic activities (i.e. exporting, investment, production) or to provide relief to some group?s tax burden (i.e. families, disabled, charities, retired people). These regulations are defined as tax expenditures or tax concessions in the tax system, to find out whether its effective and productive or not, tax expenditures need to work more cost effectively of the tax system, analyse, calculate costs, and report as annual tax expenditures.Tax expenditure reporting system of a country is formed by the phases of the determination of taxes to be subject to tax expenditure analyzes, the definition, the classification, the measurements of costs and the presentation of estimates of tax expenditures. Tax expenditures reports were first started in Germany and The United States in the late 1960s. Other developed countries have followed them. Although tax expenditure budgets have been commonly used in many developed countries, less developed countries haven?t prepared it yet. The use of tax expenditures analysis to determine cost of tax concessions is increasing in the developed countries. Although integration tax expenditure budgets and analysis to public budgeting process is becoming important to evaluate tax policy which had been put into practice, Turkey hasn?t begun such a study about tax expenditures. In Turkey, the cost of public expenditures through the tax system is still unknown. But concept of tax expenditures is important, recently in Turkey the first tax expenditures report was published by Ministry of Finance in 2007. There was definition of tax expenditures, international practice and provisions and estimates of tax expenditures in the Turkish Tax System in 2007 in this report.There are some common points and different points between public expenditures and tax expenditures that use as an alternative of public expenditures. The common points of tax expenditures and public expenditures are benefiting to the beneficiaries and reducing the public resources for other resource usage areas. They differ from each other in aspects of being the only taxpayers as beneficiaries of tax expenditures, psychological effects, legislation technics, costs and observability. Tax expenditures? cost is not only public revenue loss, but also tax expenditures may cause distortion at tax structure. This cost is hidden. Because accounting and estimation of their quantity are not shown in any official documents. Although public resources are used, amounts of subsidy cannot be known. So, evaluation of the provisions which are sufficient and appropriate, can?t be realized. At the same time, public expenditures which are created by only public spending system, will have to be taken into consideration for any public services. Therefore, total spending from public resourses in order to realize any public services cannot be determined. So, calculating costs of tax expenditures and analyses to benefits-costs are important.In this study, taking into consideration tax expenditure concepts importance, it will be analyzed whether this kind of regulation in the tax systems are needed or not, and it will be tried to be evaluated with the help of efficiency and productivity.Key Words: Tax Expenditures, Public Expenditures, Tax Concessions, Exemption, Exception, Reduction.