The primary function of tax legislation is to raise a budget for govern- ment expenditure. Tax incentives can also be used to achieve creative industries policy goals. This book defines tax incentives as a provision in tax legislation that departs from the benchmark tax structure and favors creative industries, resulting in a reduction or postponement of tax income for the government. Tax incentives must be considered relative to alternative policy tools such as spending programs, reg- ulations and information campaigns. Many tax experts are not in favor of tax incentives. Some of their arguments apply to direct subsidies as well, but others are more specific to tax incentives. Even though tax incentives are not without fault, the OECD has formulated conditions for successful tax incentives. Not only fiscal policy arguments but also creative industries policy objectives are of importance when deciding on the most appropriate instrument. From the latter perspective, tax incentives have several benefits. A prerequisite for the effective and efficient use of tax incentives is that they are accounted for, controlled and evaluated in the same way as direct subsidies. As this is currently not always the case, tax incentives are, in that respect, inferior to direct subsidies.

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Fiscal Autonomy and its Boundaries
Erasmus School of Law

Hemels, S. (2017). Tax Incentives as a Creative Industries Policy Instrument (Chapter 4). In Tax Incentives for the Creative Industries (pp. 33–64). doi:10.1007/978-981-287-832-8_4