The neutrality principle and the economic efficiency of tax policy: an exploratory study of the legal-economic approach

This study explores the relationship between economic efficiency and the principle of fiscal neutrality and seeks to analyse the application of these concepts in public policy. Economic efficiency is considered one of the main objectives of tax policy and aims at the optimal allocation of public resources. The principle of neutrality seeks to avoid, in response to the effect of tax law enforcement, the existence of distortions in the economy and agents' behaviour. Legal-economic analysis is used to evaluate tax policies, considering the impact of legal rules on decisions and preferences. On the other hand, harmonising efficiency and neutrality criteria are currently considered a real challenge and essential for an exemplary implementation of tax policy. However, it is recognised that no tax is entirely neutral and ex-ante and ex-post analysis is critical to assessing the effectiveness of tax policies.