Germany: Selected Issues
IMF Staff Country Reports, July 18, 2024
Source details
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- Germany: Selected Issues
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Bibliographic details
- Published: July 18, 2024
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400283406.002
Summary
- This Selected Issues paper explores options for Germany to generate additional fiscal room by reducing its public spending and increasing its revenues, while minimizing the associated costs to the economy.
- The menu of policy options is guided by examining areas where Germany stands out in simple comparisons against other advanced economies.
- The paper presents more options than are necessary; not all options need to be adopted.
Key findings
- Germany could increase its collection of taxes on real estate.
- Germany could generate revenue by closing unnecessary and distortionary loopholes in the treatment of property within income and corporate taxes.
- A moderate easing of the debt-brake’s limits could help generate substantial fiscal room for higher public investment and other priority spending needs, as well as for growth-enhancing tax reforms.
- The appropriate choices among these measures and other options will depend on public preferences across various dimensions, including distributive preferences and views about the appropriate size and role of the state.
Policy options and recommendations
- Increase collection of taxes on real estate.
- Close unnecessary and distortionary loopholes in the treatment of property within income and corporate taxes.
- Moderately ease the debt-brake’s limits to create room for higher public investment and priority spending.
- Use generated fiscal room to finance growth-enhancing tax reforms and priority spending; selection of measures should reflect social preferences about government size and distributional outcomes.
Fiscal implications and trade-offs
- Revenue gains from property tax and closing property-related tax loopholes can be substantial and provide space for higher public investment.
- Easing the debt-brake’s limits involves trade-offs between fiscal sustainability rules and the need for additional public investment and reform financing.
- Choices among measures depend on public views about distributive preferences and the appropriate size and role of the state.
Subject tags and keywords
- Subject: Consumption taxes, Expenditure, Financial institutions, Loans, Pension spending, Revenue administration, Taxes
- Keywords: B. real estate development, Consumption taxes, CRE exposure, CRE loan, D. solvency stress analysis, Global, Loans, Pension spending, property tax tax revenue, spending pressure
Content in this bundle
- Germany: Selected Issues; IMF Country Report No. 24/230; July 1, 2024