The Government can choose to give support or assistance to businesses and households through different types of allowances, grants or subsidies or through concessions (exemptions and special provisions) in the tax system. Such exemptions and special provisions in the tax system are called tax expenditures. Tax expenditures are the estimated cost to the unrealized tax revenue, which means that this cost is less visible than the cost of other forms of support and allowance.

In connection with the Swedish budget reform which took place in the mid-1990s, the Government established that an important requirement to assist a new, more efficient budget process would be for all exemptions and special provisions resulting in a reduction in revenue to be subjected to equally close scrutiny as the general expenditure appropriations. In order for this to be possible, the support given in the form of tax expenditures must be rendered visible.

Accordingly, since 1996 the Government has compiled an inventory of tax expenditures in a statement of tax expenditure appended to the Spring Fiscal Policy Bill. The objective of the statement is both to render visible the indirect support entailed by the tax expenditures and to provide a foundation for prioritising between different types of support.

In the 2006 statement, support in the form of tax expenditures is estimated at approximately 12 per cent of the total tax revenue, or approximately SEK 170 billion. So the tax expenditures amount to significant sums. At the same time, tax expenditures do not compete for scope in the budget in the same way as general expenditure appropriations. Nor are tax expenditures scrutinised and evaluated with the same regularity as general expenditure appropriations.

Since tax expenditures entail lower tax revenues, they have the same effect on the balance of the central government budget as support on the expenditure side of the budget. With the aim of maintaining good budgetary discipline, there is thus reason to set equally strict requirements for the preparation and accounting for new and existing tax expenditures as for the preparation and accounting for expenditure appropriations.