Insight into tax expenditure, special-purpose grants and subsidies

• Nearly a third of the total budget available for tax expenditure, special-purpose grants and subsidies (€7.8, €1.4 and €1.6 billion respectively out of a total budget of €33.9 billion) was not included in the review.
• 40% of the total tax expenditure (financial volume: €4.7 billion) was not evaluated.
• 86% of the special-purpose grants (financial volume: €7.4 billion) was not evaluated; seven of the 15 evaluations contained information on effectiveness.
• There is no complete overview of actual expenditure on special-purpose grants.
• 81% of the subsidies currently available (financial volume: €4.3 billion) was not evaluated. 45 of these subsidy schemes are more than five years old (financial volume: €0.4 billion). Of the subsidies introduced before 2005, 59% have not been evaluated.
• No evaluations have been planned for 55% of 325 subsidy schemes that are expected to be in operation for more than five years.
• 38% of the subsidies do not have an end date. No evaluations have been planned for more than half of these schemes. This is not in keeping with the Van As motion of 2003, which called for all subsidy schemes to have an end date.
  

We addressed the following recommendations to the Minister of Finance and the State Secretary for the Interior and Kingdom Relations:

• Issue a report each year on government expenditure on special-purpose grants.
• Agree a new frequency for the supply of information on subsidies. The current Government Subsidy Statement becomes outdated too quickly. The new statement should provide an insight into the number of subsidy schemes available, the associated financial volume, the end dates and the planned and completed evaluations.
• Prepare plans to evaluate all current subsidy schemes and include them in the next Government Subsidy Statement. If an evaluation is not considered meaningful or feasible, specifically state and explain why not.
• Set an end date as soon as possible for subsidy schemes that do not already have an end date and include the dates in the next Government Subsidy Statement. If it is decided not to set an end date, specifically state and explain why not.

In response to our finding that nearly a third of the total annual budget available for tax expenditure, special-purpose grants and subsidies had not been included in the review, the Minister of Finance replied that the review was based on the government's main areas of responsibility and was not intended to provide an exhaustive summary of a particular type of instrument. The minister said he would investigate how information on subsidies could be provided more frequently and how the Government Subsidy Statement could be enlarged to include information on subsidy evaluations that are part of the policy reviews and on subsidy schemes that do not have an end date. The minister did not accept our recommendation to set an end date for every subsidy scheme or to explain why an end date has not been set. The Court of Audit regrets this decision. Knowledge about a scheme's effectiveness should play a part in any decision on whether or not to continue the scheme.

The State Secretary for the Interior and Kingdom Relations said she would consider the effectiveness of special-purpose grants in the annual statement. She thought it was not meaningful, however, to report each year on funds spent on special-purpose grants in order to implement government policy. The Court of Audit thinks this is a missed opportunity because it means the cost of policy is not systematically explained to the House of Representatives.