The purpose of this paper is to analyze the trends of tax expenditures in the last decade and make some policy recommendations.


The primary features of tax expenditures during the last decade are as follows: First, the national tax exemption rate from 1999 to 2008 is 12.8%, exceeding the national tax revenue rate of 9.7% over the same period. Second, contrary to growing tax exemption rate, the number of tax expenditure items decreased from 273 to 189 during that time. However, this situation is mainly caused by integration among items, item-exclusion rather than abrogation of the items in terms of the range of tax expenditures. Third, national tax exemption rate in 2009 is likely to exceed the statutory limitation on account of the rapid increase in tax expenditures regarded as effort to overcome global economic crisis of 2008.


Considering contents shown in this report, thus, it's necessary that the amount of tax expenditures should be gradually reduced for the nation's fiscal health. Moreover, some recommendations have been made here: necessity of setting standards to estimate tax expenditures, disclosing more information on each item of tax expenditures and establishing an evaluation system.