Efficiency analysis of tax expenditures

Tax expenditures are tax revenues that governments give up or postpone their collection to achieve certain economic, social, financial and political goals. The calculation and reporting of tax expenditures were made for the first time in Federal Germany in the scope of tax incentives in the mid 1950s. It became popular all over the world through the work of the US Deputy Treasury Secretary Stanley S. Surrey, who was responsible for the tax policy of the time. Surrey approached the tax expenditures with a more negative perspective and regarded the high tax rates applied to a smaller tax base of tax expenditures. Tax expenditures provide "hidden wellfare" to some community groups and increase exponentially unless they are under control and review. As a result, tax revenues are decreasing; governments have to set higher tax rates to cover the falling tax revenue gap. In addition, the fact that tax expenditures are not included in the budget processes ensures that these expenditures remain "hidden" and gets rid of the criticisms made for budget expenditures. Another criticism for tax expenditures is why these incentives or benefits are not covered by the budget. In today's world, where governments are affected by voters, people close to the government, and various lobbying groups, it will be seen that these expenditures are vulnerable to bad use. Therefore, reporting and evaluating tax expenditures, which can be cost very high values, are necessary to ensure openness, transparency, efficiency and effectiveness. To what extent these expenditures benefit the targeted objectives during the evaluation can be made through effectiveness and efficiency analysis. There are several methods of efficiency analysis. Data Envelopment Analysis is one of these methods. The most important feature of this method is its flexibility. The idea of measuring the efficiency of Farrell in his article in 1957 was systematized by Charnes, Cooper and Rhodes, and data envelopment analysis emerged. The method produced by Charnes et al. is based on the constant effectiveness assumption and is known as the CCR method, which is an abbreviation of the initials of their surnames. The BCC method was created by adding the changing effectiveness assumption to this method. The method briefly determines the efficiency scores, rankings and projections of efficient and inefficient ones by comparing decision making units. In this study, by using these methods; tax expenditures in Turkey were compared with those countries with which data is collected, efficiency scores, rankings and projections of Turkey and other countries were determined.