Basic Report

  
  
    The purpose of this study is to examine issues in the criteria, calculation method and use of local tax expenditure accounts in order to implement local tax expenditures budgeting system. The concept of a local tax expenditure was developed in recognition of the fact the tax system can be used to achieve similar goals to public spending programmes, but that accounting for the costs and benefits of tax measures is often less rigorous and regular than for direct expenditure.
   The local tax expenditures budgeting system is planning to begin in the year of 2010. Prior to implement the system, local governments keep in practice in order to make good complement of the budget report.
   This study examined the criteria of local tax expenditures, calculation method, budget classification, and report forms for implementing the local tax expenditures budgeting system under the consideration of validity and feasibility, and administration simplicity.
   Local tax exemptions and rate reliefs is proposed as the criteria of local tax expenditures. Not like national income tax, a deviations from the normal local tax structure is rather simple. The method of calculating local tax expenditures has three principal means: the revenue forgone method, the revenue gain method, and the outlay equivalent approach. This study proposed the revenue forgone method along with a cash basis because all OECD countries use them. There are a number of differences in practice in presenting of tax expenditure reports. This study proposed the local tax expenditure report is the same forms as the national tax expenditure report in order to enhance comparability with direct spending accounts. Thus, the local tax expenditures budgeting report is classified by the type of tax involved and the function of expenditures.