IMF Staff Country Reports

Germany: Selected Issues

July 18, 2024

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International Monetary Fund. European Dept. "Germany: Selected Issues", IMF Staff Country Reports 2024, 230 (2024), accessed November 23, 2024, https://doi.org/10.5089/9798400283406.002

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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 resulting menu of policy options is guided by examining areas where Germany stands out in simple comparisons against other advanced economies. Germany could increase its collection of taxes on real estate. Germany could also generate revenue by closing unnecessary and distortionary loopholes in the treatment of property within income and corporate taxes. These measures and 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. This paper presents more options than are necessary, meaning that not all of the options need to be adopted. Choices between the various options will depend on social preferences, for example on the size of the government.

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

Publication Details

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