Tax concessions comprise targeted provisions within tax codes that relax levies otherwise due to deliver economic, social or environmental policy objectives.
Common Concessions:
- Charitable deductions reward nonprofit donations with reduced burdens
- Capital gains discounts incentivize long-term investments and business activity
- Special economic zone tax holidays spur foreign direct investments
Example:
Renewable energy producers benefited from investment tax credits in many nations to stimulate green infrastruction development.
Takeaways:
Concessions aim to alter taxpayer behaviors delivering broader returns exceeding foregone revenues. Their impacts must outweigh high compliance costs and inequitable benefits for some groups over others. Ongoing reviews gauge successes to rationalize continuation or reform.