Xuhong Li（Economic Law）
Supervised by Prof. Jianwen Liu
Abstract
The tax expenditure system has been regarded as“the important invention in public finance and taxation over the past two to three decades”by the western scholars. The concept of tax expenditure originates from the USA in the late 1960s.Since then, Britain, France, the Netherlands, Austria, Canada, Spain, Australia, Poland, Japan, Korea and other OECD countries have established the legal system of tax expenditure.Tax expenditure is a special government spending, for which the state formulates and implements special tax laws and policies to provide preferential tax treatment for certain taxpayers and tax items to relieve the tax burden and achieve the set social and economic policy targets.The system of tax expenditure is a system to calculate, estimate, analyze, evaluate, report, plan and control the tax revenue forgone due to all sorts of tax incentives, a system that is made for scientific and systemic management of tax incentives in accordance with the principle of the legalism.The tax expenditure system provides new insights and methods for the tax incentives management, and is used as a financial analysis tool in many countries.
In China, the number of the existing tax expenditure items is over 900. Great attention should be paid to the economic and legal phenomena, which has exerted and is still exerting comprehensive and significant impact on the economic and social development.We should parse, compare, analyze and identify those phenomena with the legal analysis tool.We have not established a scientific, normative and efficient system of tax expenditure in China today.In consideration of the legal issues of the tax expenditure＆nbsp；system, and the related theory and legislative issues of establishing the tax expenditure system in China, this paper carries out the discussion in the following sections：