Fifty years on, fiscal welfare remains largely ‘the hidden welfare state’, despite the growing use of tax expenditures/‘preferences’ for social purposes. Indeed, most European countries now support the development of private pensions through tax incentives, and these have also been on the increase in the fields of healthcare, home-ownership, childcare and eldercare, household services, as well as for low-income earners.
As the more developed US-based literature on the hidden welfare state has shown, this growth in fiscal welfare raises many important issues: first, in terms of the democratic political process as these policies remain largely invisible to mass publics and are less scrutinised than direct expenditures; second, in terms of the distributive effects of such policies compared to direct social expenditures, calling into question existing principles of solidarity. Third, the indirect cost, in the form of revenue foregone, that these tax expenditures represent, contributes to the weakening of state capacity. As such, these policies contribute to the transformation of European welfare states in insidious and incremental ways. These are the issues that this panel aims to address.
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