This report aims to review and analyze ‘2012 Tax Expenditure Proposal’ submitted to National Assembly by the Administration.

  The estimated size of total tax expenditure turns out to be lower by around 3 trillion won than what the Administration reports in the proposal. The estimation is differentiated from the Administration’s by considering impacts of the Administration’s ‘2011 Tax Revision Proposals’ on revenue, using more detailed data, and estimating tax expenditures on four more items (211 billion won) which were classified as ‘difficult to estimate’ by the government.

  In addition, this report delivers assessments on 118 tax expenditures whose sunsets are due in 2011–2012. This report suggests that 17 of 118 tax expenditure provisions should not be extended because of their ineffectiveness, limited beneficiary groups and change of policy environment.

  In order to mitigate the practice of extending sunsets of tax expenditures, assessments on the tax expenditure items should be reinforced. The estimation method and the data of tax expenditures should not stay only within the Administration but be open to public and used in the budgetary process in the National Assembly.