Sekt oder Selters? – Ökonomische Folgen der Reformzurückhaltung bei der Beendigung des Solidaritätszuschlags

Strohner Ludwig (), Berger Johannes () and Tobias Thomas
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Strohner Ludwig: Forschungsbereich Öffentliche Finanzen, EcoAustria – Institut für Wirtschaftsforschung, Am Heumarkt 10, 1030 Wien, Austria
Berger Johannes: Forschungsbereich Arbeitsmarkt und Soziale Sicherung, EcoAustria – Institut für Wirtschaftsforschung, Am Heumarkt 10, 1030 Wien, Austria

Perspektiven der Wirtschaftspolitik, 2018, vol. 19, issue 4, 313-330

Abstract: While the German Council of Economic Experts recommends the complete abolition of the solidarity surcharge after the expiry of Solidarity Pact II, the current plan of the German government merely provides for a partial exemption from the income tax. Simulations of the two reform scenarios with the general dynamic equilibrium model PuMA show that reform reluctance would result in significant prosperity losses. In comparison, already in the short-term 0.2 percent less GDP would be realized (0.3 percent in the long-term). This is associated with 35,000 persons (long-term 40,000) lower employment. In addition, net household income would be lower. The degree of self-financing of the reforms would amount to more than 40 percent in the short-term (50 percent in the long-term) in both scenarios. This and the current surpluses show that a complete abolition of the solidarity surcharge would be possible without jeopardizing the sustainability of public finances.

Keywords: German solidarity surcharge; reform reluctance; CGE models; Solidaritätszuschlag; Reformzurückhaltung; CGE-Modelle; German solidarity surcharge; reform reluctance; CGE models (search for similar items in EconPapers)
JEL-codes: C68 H20 H30 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1515/pwp-2018-0016

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